Welcome to Final Week 6
Week Six Topic: Applying Economic Concepts to Improve Business Decisions. Our
Week 6 objectives are to understand:
Assess tools available to improve business forecasts.
Apply economic concepts to make business decisions.
Evaluate challenges of expanding into international markets.
The goal of Week 6 is to pull together the concepts covered in the first five weeks of the
course. The Week 6 Individual report starts by requiring you to revise your Week 3
Assignments based on feedback from me then add an international component.
The reading assignments include parts of three chapters of the course text. Please note
there is no final exam for this course. Your Week 6 assignment is worth 150 points,
more than your other weeks’ assignments.
Best to you all,
Wk 6 – Signature Assignment:
Challenges of Expansion to a Foreign
Purpose of Assignment
This week students will review and revise their Week 3 Research Analysis for Business
assignment based on economic analysis and the feedback provided by their facilitator. Students
will also expand their Week 3 analyses to evaluate the challenges of expanding their chosen
company's production to a foreign market.
About Your Signature Assignment
This signature assignment is designed to align with specific program student learning outcome(s)
in your program. Program Student Learning Outcomes are broad statements that describe what
students should know and be able to do upon completion of their degree. The signature
assignments might be graded with an automated rubric that allows the University to collect data
that can be aggregated across a location or college/school and used for program improvements.
Tutorial help on Excel and Word functions can be found on the Microsoft Office website. There
are also additional tutorials via the web offering support for Office products.
Revise your Week 3 assignment, Research Analysis for Business, using the feedback provided
by your facilitator. This Week 6 report should only include one conclusion, so you will need to
rewrite the conclusion you included in your Week 3 assignment.
Select a foreign market in which to expand your chosen product. If you wish, you may use one
of the countries your team analyzed in their Week 5 Comparative and Absolute Advantage
Prepare a minimum 1,050-word report addressing the points listed below. The use of tables
and/or charts to display economic data over the time period discussed is highly encouraged, you
may submit any economic data in Microsoft Excel format in a separate file. You may use the
U.S. Department of Labor's Bureau of Labor Statistics (BLS), U.S. Dept. of Commerce's Bureau
of Economic Analysis (BEA), the Federal Reserve of St. Louis's FRED data, the CIA World Fact
Book, World Bank data, and World Trade Organization, or other appropriate sources you might
find on the Internet or in the University Library. The new sections of your report should:
Evaluate current global economic conditions and their effects on macroeconomic indicators in
your selected country. Provide forecasts for population growth, gross domestic product (GDP)
growth, GDP per capita growth, export growth, and sales growth.
Evaluate any competitors' existing production in the chosen country.
Assess sales forecasts in the selected country by using the Federal Reserve of St. Louis's FRED
data, the CIA World Fact Book, World Bank data, World Trade Organization, or other
appropriate sources you might find on the Internet or in the University Library.
Categorize the type of economy that exists in your selected country as closed, mixed, or
market. What is the difference between these types of economies and how might this affect your
Assess how your chosen country's current credit market conditions, especially interest rates and
the availability of financing, affect demand for your product or service and your planning or
operating decision for your production in that country.
Analyze the role of the selected country's central bank on that country's economy.
Compare the availability, education, and job skills of the work force in the selected country.
Discuss any additional challenges of international production, such as political stability,
availability of government financing or other incentives, threat of capital controls, and exchange
Explain any additional supply chain challenges you anticipate if attempting to make your product
in your chosen country and selling the product in other countries.
Based on the data gathered and analysis performed for this report write a conclusion in which
Create business strategies, including price and non-price strategies, based on your market
structure to ensure the market share and potential market expansions and explore global
opportunities for your business in a dynamic business environment and provide
Develop a recommendation for how the firm can manage its future production by synthesizing
the macroeconomic and microeconomic data presented.
Propose how the firm's position within the market and among its competitors will allow it to take
your recommended action.
Recommend strategies for the firm to sustain its success going forward by evaluating the
findings from demand trends, price elasticity, current stage of the business cycle, and
Recommend any comparative advantages your company will have over competitors currently
operating in that country, and defend your position, either for or against, expanding your
company's production into your chosen country based on your research.
Integrate with the Week 3 individual assignment, and incorporate corrections and suggestions
from the instructor's feedback. The final report should be a minimum of 2,800 words.
Cite a minimum of three peer reviewed sources not including the textbook.
Include all peer-reviewed references and government economic data sources/references from
Format your assignment according to APA guidelines.
Submit your assignment.
Research Analysis for
Running head: RESEARCH ANALYSIS FOR BUSINESS
Research Analysis for Business
Sheila R. Jones
May 27, 2019
Research Analysis for
Research Analysis for Business
Amazon Inc. is an American based multinational company headquartered in Seattle,
Washington. Founded in July 1994 by Jeff Bezos, Amazon specializes in electronic commerce
retailing as well as providing cloud-computing services. As of March 2018, Amazon ranks as
one of the largest private employers with 566,000 employees in the United States. The company
operates in perfect competition market structure. In this regard, many other firms such as eBay
dominate the electronic commerce industry; there are no barriers to entry into the market because
the industry is based on the internet which is not owned by anyone. Due to technology
advancement, electronic commerce platforms necessitate online buying and selling. According
to McConnell, Brue, & Flynn (2015), price of the products and services in the perfect
competition market structure is determined by price mechanisms, an interaction between demand
and supply curves.
Amazon faces competition from local and international markets. For example, local
competitors like Best Buy, Target, Kohl’s Staples, Apple, in addition to others. On the
international level competitors include Alibaba.com based in China, Yebhi.com based in India
and this include other as well. The industry has no barriers to entry but due to increased levels of
competition both domestic and internationally surviving in electronic commerce industry,
customer service is very important. Although capital investment is bearable, managing an
electronic commerce business can be hectic where the business is a startup and these barriers
tend to alarm new investors. Amazon is a competitive company in the electron commerce
industry thus emergence of new industry competitors is likely to increase competition (Kurnia &
Peng, 2010). Consequently, market share will also decrease. According to research conducted
by businessinsider.com, Amazon Company accounted for 47% of total online retail sales in the
Research Analysis for
year 2018. This was over a 10% increase from the previous year 2017 sales statistics. Product
diversification and specialization in product/services was attributed to increasing in market share
Based on the financial status of Amazon for the last three years, the company is
functioning at a prosperity phase of the business cycle. The company shows comprehensive
income for 2018 at $11.2 billion which is up $5.6 billion from the previous year (Shannon,
2019). Comparing the total assets of the company, in 2017, total assets were $131,310 million
while in 2018, total assets increased to $162,648 million depicting that Amazon is at a growing
stage. Increase in sales is prevalent in establishing company growth capacity. For instance, in
2018, Amazon total sales was $232,887 billion, a significant increase from total sales in 2017
which was $177,866 billion. Amazon gross domestic product shows increase from one trading
period to another. For example, the revenue share in the Q4 of 2018 was $107.1 billion and in
2017 the total revenue increased to $135.99 billion. This is an indication of the increase in GDP
growth of the company. An inflation rate of the United States is flexible. For instance, the
inflation rate for 2016, 2017, and 2018 was 1.6, 0.1 and 1.3 respectively. This is an indication of
company performance. Inflation is skyrocketing of price, of product, and services over a given
period usually a year. Consumer price index is the change in the price of a commodity
purchased by a consumer. According to government statistics, CPI increased to 245.03 in
August of 2018 from CPI index of 244.05 in July 2018. In essence, increase in CPI is an
indication that the company is doing great because consumers can purchase products and
The employment rate in the United States was 4.3% in May 2018. This was according to
government released statistics. From the Keynes’ law, when many citizens are unemployed, the
Research Analysis for
income is decreased. Based on the insight that increase in income of the consumers has a
proportional increase in demand, it is rational that unemployment affects company financial
performance. Bureau of Labor Statistics indicated that US unemployment rate in 2016 was
5.6%, in 2017 was 5.0% while in 2018 was 4.7%. This trend depicts decrease in the
unemployment rate in the United States.
Therefore, conclusion can be drawn that unemployment rates in the United States is
decreasing considerable resulting in economic empowerment for Americans. As such, increase
in revenue generation by Amazon can be attributed to decreased unemployment rate which
makes consumers have an income to purchase company products and services. Additionally,
federal funds rate is also a macroeconomic factor in Amazon’s business environment. It
involves interest rate that banks and other money lending institutions charge each other on an
uncollateralized basis. In the last three years, federal funds rate has been increasing since 2016.
Increase in federal funds rate is an indication that money supply is affected which is an
advantage to the businesses. The prime rate is also a macroeconomic factor in the United States
business environment. It denotes the lowest interest rate that amount is borrowed for
Prime rate in the United States was 3.75% in 2018 increased from 3.50% in 2017. As of
June 2018, prime rate stood at 4.25%. Essentially, from the trend of the prime rate, it is clear that
borrowing from banks and other money lending institutions are becoming hectic. Entrepreneurs
are not willing to pay higher interest rates. This creates the barrier to entry in the electronic
commerce industry (Mndzebele, 2016). With this, existing industry players including Amazon
continue to dominate locally, regionally, and internationally.
Research Analysis for
With advancement in technology taking root across all sectors of the economy, electronic
commerce has emerged to be one of the most rewarding businesses operating in the technology
sectors (Galliers & Newell, 2002). As a result of digitization of operations, internet services
increased across the United States and globally. Electronic commerce gives customers an
opportunity to purchase products and services while in their residential comfort. This is an
advantage that has been enjoyed by most Americans. Therefore, a traditional method of buying
has shifted to internet purchasing. Research indicates that 50% of the world’s citizens have
access to the internet connection through devices such as smart phones and laptops. For the
same reason, Amazon has received high market demand. For example, Amazon net sales
increased from $88,988 billion in 2017 to $107,106 billion 2018. Net sales in 2018 for Amazon
was $135.99 billion.
This trend indicates growth for Amazon. The demand of Amazon product is highly
influenced by convenience and price levels of the product. Customers purchasing from an online
platform incur fewer costs compared to shoppers at brick and martyr facilities. The second
strategy that influences customer demand is technology shift. Americans are becoming more
gullible to internet services. This enhances business growth and high supply strategy by
Amazon. The elasticity of demand is the degree of responsiveness caused by the change in price.
Amazon deals with wide range of products. Essentially, Amazon buys from manufacturers and
sells to their customers at a profit. Prices vary according to product or services. For example, on
the company’s website, the price of an iPhone can vary from $200 to $300. However, due to
competition across the market, customers prefer to shop from other online e-commerce
companies such as eBay. When price change, customers look for cheaper products from other
Research Analysis for
platforms. In perfect competition market structure, the price is determined by demand and
supply interplay (Sanghi, 2016).
In production, fixed costs are costs that are deemed not to change regardless of
production capacity. Contrary, variable costs change according to prevailing production
situations such as an increase in demand. Amazon is a retail company, meaning it does not
manufacture its products. However, Amazon incurs fixed costs such as costs of electricity,
salaries, insurance, rent, and interest among other things. Examples of variable costs that
Amazon incur include research and development, credit card fees, and commissions in addition
to other expenses. When cost total is higher than budgeted, Amazon experience unfavorable
financial situations. Amazon work to reduce variable costs and understands that when costs are
high, profits decrease.
The electronic commerce industry is definitely imperative to the modern business
environment. With an increased need for technological innovation and invention, the shift from
traditional purchasing methods is becoming outdated where people across the globe are shifting
to online demand. Therefore, to remain relevant in the industry, as part of the recommendation,
Amazon should be proactive and strongly invest in system security. This will enhance customer
data protection, confidentiality, and privacy. In addition, this will reduce the threat of hacking
and other cybercrimes. To gain further global expansion, Amazon should internationalize
operations to accommodate all customers. Based on the microeconomic data such as demand and
supply, Amazon can synthesis its sales through effective customer services. From the law of
demand, Amazon should work towards reducing the prices of products to increase quantity
demanded. To manage the microeconomic environment, Amazon can use the advantage of
increasing consumer price index derived from the decreased unemployment rate.
Research Analysis for
Amazon is the largest multinational electronic industry. Therefore, using its position,
Amazon has a high chance of taking advantage of both microeconomic and macroeconomic
opportunities to register growth. Using the internet, Amazon can improve services to increase
demand. Ideally, as indicted by Walker (2012), because customers are willing to purchase using
the internet, Amazon can sustain this demand through proper customer services. Government
policies regulate the electronic commerce industry through patent and product quality. Based on
finding of price elasticity data, Amazon should maintain an affordable price on its products
targeting low-income earners.
Research Analysis for
Galliers, R. D., & Newell, S. (2002). Electronic Commerce and Strategic Change within
Organizations. Strategies for eCommerce Success.
Kurnia, S., & Peng, F. (2010). Electronic Commerce Readiness in Developing Countries: The
Case of the Chinese Grocery Industry. E-commerce.
McConnell, C., Brue, S., & Flynn, S., (2015). Economics Principles, Problems and Policies,
(20th. Ed.) McGraw-Hill Education, phoenix.vitalsource.com
Mndzebele, N. (2016). The Relationship between e-Commerce Adoption and Competition in the
Hotel Industry. International Journal of Information and Education Technology, 6(5),
Sanghi, A. (2016). E-Commerce Valuations in India and Its Effect on Competition. SSRN
Shannon, J. (2019, February 16). Amazon pays no federal income tax for 2018, despite soaring
profits, report says. Retrieved from
Walker, G. (2012). The rise of ecommerce as an epidemic in the small world of venture capital.
Network Strategy Advances in Strategic Management, 3-29.
Identified the market structure student’s
chosen firm operates in, analyzed student’s
chosen firm’s current market share, and
identified the firm’s local/global competitors.
Analyzed the barriers to entry in this market to
illustrate the potential for new competition and
its impact on firm’s future in the market.
Identified and explained trends in current
macroeconomic indicators for last three years
• Current stage of the business cycle.
• Real gross domestic product (GDP).
• Inflation as measured by the consumer
price index (CPI).
• Unemployment rate.
• Federal funds rate.
• Current rate for borrowing funds such as
the so-called “prime rate.”
Evaluated trends in demand over last three
years and explained their impact on the
industry and the firm. Included quarterly (last
two quarters) and annual sales (last three
years) figures for the product student’s firm
sells. Created business strategies by
analyzing information and data related to the
demand for and supply of firm’s product(s) to
support student’s recommendation for the
firm’s actions. Included a graphical
representation of the data and information
used in student’s analysis.
Examined available, current data and
information, such as pricing and the
availability of substitutes, and explained how
student could determine the price elasticity of
demand for firm’s product. Assessed how the
price elasticity of demand impacts the firm’s
pricing decisions and revenue growth.
Applied the concepts of variable and fixed
costs to firm for informing its output decisions.
Analyzed how different kinds of costs (labor,
research and development, raw materials)
affect the firm’s level of output.
Based on the data gathered and analysis
performed student’s conclusion included:
• Business strategies, including price and
non-price strategies, based on market
structure to ensure the market share and
Market structure well
identified. Competition and
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