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Tuesday, August 26, 2014

Amazon in the Hexagon

The main newspaper in my hometown Seattle recently came out with an article about Amazon's efforts to operate in France:   Amazon ignites culture clash over France’s beloved bookstores.
I'm sure that everyone knows what Amazon is (that big on-line retailer) but you might not know that Amazon was founded in Seattle and is part of a number of other international companies that came out of the US Pacific Northwest (some others are Starbucks and Boeing).

There is a long history of American companies trying to break into the European market with uncertain results.  Nancy Green's latest book (which I highly recommend) about The Other Americans in Paris (many of whom were American businessmen) has an entire chapter devoted to doing business in the Hexagon.  It wasn't easy in the twentieth century and it's not a cake walk now.

From the tone of the article Amazon seems to be annoyed that they actually have to negotiate and adapt to other markets and other business environments.  Their issue is not that they are failing internationally, but that they are not as successful as they would like to be.  Now what is more likely here, folks?  That all these countries are going to see the light and change their ways so that Amazon's business model can stay the same wherever they go?  Or, that they are going to have to adapt and stop whining because the rest of the world is not like the United States?

The French want some protection for local bookstores and the Germans want their labor laws respected, and just what in the heck is wrong with that?  For that matter, the Pacific Northwest being something of a hotbed of what Americans call "liberalism" (left-wing thinking such as it is in the US), it strikes me that many Seattleites, Portlanders and the like might just come down on the side of France and Germany in this fight.

And it looks like I'm on to something.  Powell's Books, which is something of an institution in Portland, Oregon, USA, got a big boost from Stephen Colbert of the Colbert Report (a US TV program that is widely watched).  Colbert's books are published by Hachette.  Have a listen:



So it's not just the Europeans (UK, France and Germany) kvetching and being "unreasonable" - there are bookstores and authors in the United States who have issues with Amazon as well and now some are calling for a boycott.

When I was studying for my MBA (in Europe) one of the classes was on corporate responsibility and a lot was said about the "contract" under which companies operate anywhere.  Not the legal framework, mind you, but the social context.  The right of any company to do business is conditional (even in "free market" countries) and where a company is perceived as a being a bad actor, they can lose a lot of business and credibility, too.  What I've outlined above is a lot of bad publicity for Amazon with some major stakeholders all over the world loudly expressing their discontent.  (And is it not ironic that this criticism travels the world using the same technology on which Amazon has based its business?)

Perhaps if they are not happy with their profits in Europe, a better way to go about it is to engage the stakeholders (a group which, by the way, includes, but is not restricted to, shareholders).  That is not "cultural exception" logic - it is simply good business practice:
"Employees, customers, suppliers and distributors, other allies and partners, communities where the company locates facilities (or where the supply chain members are located), owners and investors, creditors, and local, regional and national governments are among the stakeholders to whom it makes sense to pay attention..."
This quotation is from Total Responsibility Management by Sandra Waddock and Charles Bodwell.  It is available here on Amazon.  A modest suggestion to Amazon's management - you guys and gals might want to start reading some of the books you sell.

3 comments:

James Wattengel said...

Amazon's goal everywhere, not just France, is to become a monopoly. It is a case study in monopolistic practices. In the US existing anti-trust laws are no longer being enforced.

Christophe said...

"Employees, customers, suppliers and distributors, other allies and partners, communities where the company locates facilities (or where the supply chain members are located), owners and investors, creditors, and local, regional and national governments are among the stakeholders to whom it makes sense to pay attention..."

I totally agree with that quote. That is in fact the business model of the company I work for, and it's been working well for us.
We represent those relationships using triangles:
https://buildingstrongerpartners.wordpress.com/tag/national-instruments/

Scroll down to "Partners are critical to our success".

Tim said...

Victoria,

Sorry I strongly disagree with you. This "social responsibility" crap is how we end up with FATCA.