1. Assuming that eBay makes the decision to go Latin America, prepare a roadmap for eBay's expansion in this region during the next five years. Specifically, what should be the sequence of entries in the six major Latin America countries in Exhibit 6? Use relevant facts from the case to support your decision.
The six major Latin America countries are Brazil, Argentina, Mexico, Colombia, Venezuela, and Chile. Although eBay was the largest online trading company by developing a web-based community in 2001, it was not well recognized in the Latin America region. The language, currency exchange, and lack of knowledge of the region are the main challenges which eBay were facing. In early 2001, eBay bought iBazar which allowed them to step into a Latin America market Brazil. However, the acquisition was driven by the European market. Thus, Latin America wasn't the main focus of this action. But Brazil was a good start. Brazil was already among the top twenty global e-commerce markets and representing over half of the region's e-commerce activity.
According to an IDC study, the internet user in Latin America area will grow 40 percent per year between 2001 and 2005. The online trade was expected to be worth $72 billion in Latin America by 2005. Mexico and Brazil would be the largely dominated. I would say Mexico is the second market that eBay will enter. However, eBay did not know much about the region, language, and culture. Therefore, eBay needed a partner before the second step. MercadoLibre.com and deRemate.com are the two main possible options.
In 2001, MercadoLibre.com became eBay's exclusive partner for the Latin America region. MercadoLibre was established in 1999 in Argentina (Argentina would be the third market) and later expanded to Brazil, Mexico, and other South American countries. "MercadoLibre will acquire iBazar Com Ltda., the Brazilian subsidiary of iBazar SA, which was recently acquired by eBay. In return eBay will receive a 19.5% ownership interest in MercadoLibre".
China, there would be a multitude of early adopters interested in checking out the product online
“Latin America includes the entire continent of South America, as well as Mexico. Central America, and the Caribbean Islands. Physical geography has played an important role in the economic development of Latin America.” (Doc A and Doc G) Latin America has many unique cultural characteristics, industrial products, agricultural products, and human activity.
Growth of financial market in Brazil stimulated mainly through developed markets of coffee, soybeans, iron ore and other minerals. Because prices on those commodities are high, traders are making good profits. The Brazilian sugar industries attract a lot of domestic and international investors and are doing very well in IPOs. In addition, Brazil has a modern financial market; including a solid banking system, a state-of-the-art payment system and a reliable market infrastructure, with the capacity to process ten million trades per day. (Your Partner for Brazil) In 2002, the Brazilian Central Bank launched the Brazilian Payment System, which allows final and irrevocable real-time transfers. (Financial Sector and Capital Markets).
During the late nineteenth and early twentieth century, the United States was the most dominant power in the Western Hemisphere. European nations conceded to the United States their right of any intervention in the Western Hemisphere and allowed the United States to do whatever they wanted. The United States took this newly bestowed power and abused it. The United States intervened in many Latin American countries and imposed their policies on to these countries against their will. A perfect example of this aggression is what occurred in the Dominican Republic in 1904. The United States intervened in this sovereign nation and took control of their economy and custom houses. A memorandum from Francis B. Loomis, the United States Assistant Secretary of State, to the Secretary of States illustrates the United States’ goals, interests, attitudes and assumptions in the Dominican Republic and how the United States policy makers felt towards Latin America during this time period.
Latin America has been known throughout history to take orders and to have resources taken away from their bare hands. They were never appreciated for the struggles that they went through to provide distant countries with useful resources. Fast-forward to he new twentieth century and Latin America has taken over the corporation scene, an example being the company known as America Movil. A company that is putting Latin American countries on the map once again, but this time no one is managing them instead they are managing themselves.
Many business owners and entrepreneurs are doubtful about the global opportunities available to their business. In other words, business owners don’t give consideration to the world markets, instead they tend think locally in terms of gaining customers. This doubt however is unfounded. The international trade commission reported that 70% of the world’s purchasing power and 95% of the world’s consumers are located outside of the United States, which means that there is a massive market that is currently untapped by 99% of business in America. In addition to doubt, there is the uncertainty about exporting to other countries, this uncertainty may stem from lack of knowledge about foreign trade and the international laws. A business owner may be uncertain about how, when, where, and to whom it is legal to ship their products. Although, this uncertainty is understandable it is not required for businesses that are conducting business legally within the United States, business owners should remain mindful of this so that they can push their uncertainties aside. The last factor that deters businesses from international trade is Fear. Fear that there will be unforeseen and uncontrollable issues with transporting goods such as: theft, loss, damages, diversions, and/or regulatory penalties that may be imposed on the business. Although, there is a
Enter Australia, India, Indonesia, Philippines, Singapore, Thailand, Taiwan, Malaysia, India, and Indonesia; Further develop Hong Kong market; Enter Korea whenever regulations allow it.
International regulations are slowing Amazon’s expansion. Some countries’ regulations limit possibilities of internet purchases. However, internet providers bring faster and more affordable internet to more consumers which enable more consumers to shop at Amazon. Often, the company under analysis needs help of national governments to launch its authorized countywide websites and receive benefits in regard to taxation. In less internet penetrated open countries, besides direct investments, Amazon requires assistance of local authorities to develop the demand for e-commerce to a significant level. An online global retailer can expand its operations to closed countries through strengthening political relationships and trade pacts. In new countries, Amazon needs either pre-determined national priority supporting the e-market development or strong governmental lobbying of internet-based industry to increase the governmental capacity to earn. In some instances, the corporation needs local political hierarchies to relax cultural or religious ideologies for facilitating conditions friendly to the e-commerce development.
The organization has had to ensure that it has retail stores in many countries globally and website options in more than 100 countries. The company further enhances access of online stores in more than 37 countries which is accessible all the time and people are able to access the services regardless of their location. Globalization further affects the organization in the sense of international market management which requires it to engage in strictly global decision making. The organization’s production networks have been geared to enhancing global competition (Lüsted, 2012) .The Company is further good when it comes to seizing the opportunities available in global market. For the organization to find efficient as well as cheap means of production, it has to bargain hard so as to allow its contractors to have low profits. This mostly is consequential to the suppliers cutting corners with the use of cheap
"Can South America China-ify Its Economy Without Destroying The Amazon? | Co.Exist | Ideas Impact." Co.Exist. Web. 04 Dec. 2013.
One of the greatest opportunities for Amazon is an Online Payment System. The online system allows the company to reduce transaction fees and increase ease of use for their customers. Internet sales are increasing at a fast pace. This is a product of increased fuel prices, which make driving to a store less likely, and foreign purchases. This development allows foreign purchases to buy clothing as it becomes more popular abroad. Amazon’s biggest competitors can include retail stores that online stores such as Target, Best Buy, and Walmart among others, these can be considered the most dangerous for them since they have strong market share and can be a direct competitor since they attack the same market. Amazon wish to compete in prices, offering
exiting out of some international markets this leaves a larger market segment available for eBay
Some international companies, which are based in USA, are doing business with Latin America due to its large population of about 600 million people (Epstein, 2015). According to Epstein (2015), the number of commodities produced in the US and exported to Latin America
...top three nations in the Latin America region when it comes to technology and Internet penetration” (STAFF, 2010). Panama has thrown Chile from his second place and has grown a lot within the wireless section.
Secondly, not only Amazon takes the most of the e-commerce, but also the M&A (Mergers and acquisitions) strategy helped Amazon to get access to the international market. In order to meet its ambitions in entering the global market, it’s necessary to take some actions to purchase some of the e-commerce corporations in the local market. Amazon purchased Chinese local e-commerce company Joyo.com in 2004 to totally enter Chinese market. M&A can help a company to increase the value generation, cost efficiency through economic scale and market share (Finance). By purchasing local corporations, Amazon could build up itself to compete with other rivals in the local market. At the same time it can also reduce some rivals by cooperating with then rather than competing.