Question

INSTRUCTIONS

Read the following case study about Amazon, and then submit a posting with answers to the 5 questions below. Your answers will be graded primarily on content, but grammar, spelling, syntax, etc will also count. Please make sure that your answers are labeled to match the Question numbers so that I can easily read (and grade) your submissions

CASE STUDY: THE AMAZON OF INNOVATION

On December 2, 2013, Amazon.com customers ordered 36.8 million items worldwide, an average of 426 items per second, with more than half of the orders from mobile devices. At the peak of sales for the Xbox One and the Playstation 4, Amazon customers purchased more than 1,000 of those units per minute. The last local express delivery was ordered by a customer in Everett, Washington at 12:26pm and was delivered at 3:56pm that same day.

You may think of Amazon as simply an online retailer, and that is indeed where the company achieved most of its success. To do this, Amazon had to build enormous supporting infrastructure – just imagine the information systems and fulfillment facilities needed to ship 36.8 million items on a single day. That infrastructure, however, is needed only during the busy holiday season. Most of the year, Amazon is left with excess infrastructure capacity. Starting in 2000, Amazon began to lease some of that capacity to other companies. In the process, it played a key role in the creation of what are termed “cloud services,” which you will learn about shortly. For now, just think of cloud services as computer resources somewhere out in the Internet that are leased on flexible terms.

Today, Amazon’s business lines can be grouped into three major categories:

• Online Retailing
• Order fulfillment
• Cloud services

Consider Each.

ONLINE RETAILING

Amazon created the business model for online retailing. It began as an online bookstore, but every year since 1998 it has added new product categories. The company is involved in all aspects of online retailing. It sells its own inventory. It incentivizes you, via the Associates program, to sell its inventory as well. Or it will help you sell your inventory within its product pages or via one of its consignment venues. Online auctions are the major aspect of online sales in which Amazon does not participate. It tried auctions in 1999, but it could never make inroads against eBay.

Today it’s hard to remember how much of what we take for granted was pioneered by Amazon. “Customers who bought this, also bought that;” online customer reviews; customer ranking of customer reviews; books lists; Look Inside the Book; automatic free shipping for certain orders or frequent customers; and Kindle books and devices were all novel concepts when Amazon introduced them.

Amazon’s retailing business operates on very thin margins, meaning it makes very little money off of any one item. Products are usually sold at a discount from the stated retail price, and 2-day shipping is free for Amazon members (who pay an annual fee of $99) How does it do it? For one, Amazon drives its employees incredibly hard. Former employees claim the hours are long, the pressure is severe, and the workload is heavy. But what else? It comes down to Moore’s Law and the innovative use of nearly free data processing, storage, and communication.

ORDER FULFILLMENT

In addition to online retailing, Amazon also sells order fulfillment services. You can ship your inventory to an Amazon warehouse and access Amazon’s information systems just as if they were yours. Using technology known as Web services your order processing information systems can directly integrate, over the Web, with Amazon’s inventory, fulfillment, and shipping applications. Your customers need not know that Amazon played any role at all. You Can also sell that same inventory using Amazon’s retail sales applications.

CLOUD SERVICES

Amazon Web Services (AWS) allow organizations to lease time on computer equipment in very flexible ways. Amazon’s Elastic Cloud 2 (EC2) enables organizations to expand and contract the computer resources they need within minutes. Amazon has a variety of payment plans, and it is possible to buy computer time for less than a penny an hour. Key to this capability is the ability for the leasing organization’s computer programs to interface with Amazon’s to automatically scale up and scale down the resources leased. For example, if a news site publishes a story that causes a rapid ramp-up of traffic, that news site can, programmatically, request, configure, and use more computing resources for an hour, a day, a month, or whatever it needs.

With its Kindle devices, Amazon has become both a vendor of tablets and, even more importantly in the long term, a vendor of online music and video. And to induce customers to buy Kindle apps, in 2013 Amazon introduced its own currency, Amazon Coins. And, recently Amazon opened a 3D printing store from which customers can customize their own toys, jewelry, dog bones, and dozens of other products. Amazon is also beginning its foray into drone delivery.

QUESTIONS

1. Based on the facts presented, what do you think is Amazon.com’s competitive strategy?
2. Jeff Bezos, CEO of Amazon.com has stated that the best customer support is none. What does that mean?
3. Suppose you work for Amazon. What do you suppose is the likely reaction to an employee who says to his or her boss, “But, I don’t know how to do that”?
4. Using your own words and your own experience, what skills and abilities do you think you need to have to thrive at an organization like Amazon?
5. What should UPS and FedEx be doing in response to Amazon’s interest in drone delivery?

Answer 1

1- Based on the facts presented, what do you think is Amazon.com’s competitive strategy?

I think Amazon.com’s competitive strategy is to have the lowest cost across the industry.if you see the amazon logo there will be an arrow pointing from A to Z which means eveyrthing from A to Z,any kind of products are available on amazon.Wide ranges of people using its site along with the services they offer prove they are aiming to be one of the largest online retailers. On Amazon.com you are able to purchase items sold by amazon or by a third party seller. You are able to purchase electronics, clothing for the whole family, tools, jewelry, and so much more. Amazon.com has placed special emphasis to have something interesting on their site for the whole family. Companies and organizations use Amazon.com to save money on supplies and things they need to run their business.One of the greatest differences between amazon shopping site and other sites is amazon gives huge discounts on every product during occasions such as christmas or during lightning deals where products costs atleast 40% than usual.

2- Jeff Bezos, CEO of Amazon.com has stated that the best customer support is none. What does that mean?

Jeff Bezos statement means having a system set in place that is running so well and has no glitches that customers who use your website never need to contact you because there is never a problem. Having a network and the infrastructure to keep everything running smoothly would be only part of what would be necessary to achieve Jeff Bezos statement.

3- Suppose you work for Amazon. What do you suppose is the likely reaction to an employee who says to his or her boss, “But, I don’t know how to do that”?

A boss is likely to tell the employee that he/she was hired not for what they already know how to do, but for the new things they can figure out how to do. It is that willingness to push into the unknown that is valued. Employees who can’t tolerate this expectation will not stay employed at that company for long. A company that is serious about innovation would not tolerate employees who are fearful of taking risks and experimenting. Employees in these types of companies will be expected to do things they don’t know how to do all the time.An employee who says that obviously doesn’t have the four skills of abstract reasoning, systems thinking, collaboration, and experimentation,that person should attempt to work with a team in order to foster collaboration skills. A boss for Amazon wouldn’t want to hear that because all of Amazon’s services are based off thinking outside the box and being creative with the company’s business model.

4- Using your own words and your own experience, what skills and abilities do you think you need to have to thrive at an organization like Amazon?

The skills of innovative and fast-forward thinking, collaboration and teamwork and strategic analysis and hard work shall help to thrive at an organization like Amazon. As mentioned in the case study, Amazon drives its employees incredibly hard, hours are long, and pressure is severe.This is where hard work and endurance can help an employee thrive in the organization.Also, amazon is constantly innovating new standards and entering new markets, thus i must be similarly dynamic and must be able to adapt to changes themselves. i must be able to reIect the values of its company. In this case, being innovative and fast forward thinking will help them reIect their company better.Amazon also has many competitors in the market. It is necessary for amazon to be one step ahead from its competitors. Thus, an employee’s contribution to Amazon will be higher if they can analyze the company’s business model and business objectives strategically.

5- What should UPS and FedEx be doing in response to Amazon’s interest in drone delivery?

With Amazon’s interest in drone delivery, UPS and FedEx are researching for their own drone delivery system with more advanced features than Amazon air. UPS wants to provide improved object detection because it is not efficient for drone delivery to take only GPS co-ordinates for delivery. If this doesn't work out for UPS or FedEx,Rather than resisting the exploration of this innovation , They should be discussing ways that they can partner with Amazon in this venture (form an alliance).