Question

What role does information technology play in Walmart and Amazon? How is it helping them refine their business strategies?

Answer 1

1. What role does information technology play in Walmart and Amazon?

Walmart :- Historically, Wal-Mart’s information technology strategy has long favoured an internal “build rather than buy” approach which has spawned innovative business strategies. Wal-Mart prefers to build in house strategic systems that allow the company to gain competitive advantages. Retailers are known to prefer home-grown systems and Wal-Mart’s immense size has traditionally been a hindrance in running off the shelf packages. The in-house systems approach has been a source of competitive advantage for Wal-Mart. “Wal-Mart was a pioneer in applying information and communications technology to support decision making and promote efficiency and customer responsiveness within each of its business functions and between functions” . Wal-Mart is not a technology company, but it is a company in which technology is a key enabler of business strategies. Since technology has been a crucial component of the organisation’s competitive advantage, its IT governance archetype can be characterised as an IT duopoly. The IT duopoly arrangement allows technology executives and business unit leaders to collaborate on technology projects and decisions. The new Global E-Commerce initiative is in keeping with that philosophy as the new division’s key responsibilities include, “running Walmart’s ten websites worldwide, building and testing cutting-edge technology at Walmart Labs, and building Walmart’s eCommerce capabilities” Additionally, in order to bolster its e-commerce staff, Wal-Mart has purchased 14 companies primarily for the purpose of gaining access to engineering personnel. As a result of Wal-Mart’s emphasis on ramping up e-commerce talent, its e-commerce sales grew from 4.9 billion to 12.2 billion dollars between 2011 and 2014; an increase of nearly 150%.

Amazon :- Amazon web service has become a global platform for individual to retailers to sell their products. Through reliable, scalable, and robust web service amazon creates a global domination. The challenges of amazon.com web services are very prominent. Every second thousands of customers are searching. For products and ordering products, the systems have to be fast, reliable and secured. Every second CRM (Customer Relation Management) system is taking customer information though their searching, data mining, wish list and so on. Whatever customer buys or not they are providing information about them. Systems are smart enough to analysis the information and provide service accordingly. For tracking fraudsters amazon.com built a system known as SAS ( Smart Analysis Search).This system decrease and detect fraud in the web site by analysing behavioural pattern. SAS allows amazon.com to measure and personalise customer and help to serve customer effectively.

2.  How is it helping them refine their business strategies?

Walmart :- Information technology has brought both the business at easy reach to customers, where the customers can easily explore available products with them. Because of IT these companies have gain brand recognitions among large group of customer and suppliers, which results in expansion of their business. Information technology has helped Wal-Mart to integrate their suppliers.

Amazon :- In early stage of the amazon.com‟s journey, the business strategy of amazon.com was very simple and forward. Their one and only strategy was to sell books to the customer through online. They invested to the customer and offer them a huge collection of books through online. From the beginning their focus has been on offering the customers compelling value. They realised that the web was and still is the World Wide Web. Therefore they set out to offer customer something they simply could not get any other way and began serving them with the book. Amazon.com attracted customers by offering 1-click shopping, low price and increasing customer‟s value. Creating easy to use and easy to learn customer interfaces was a key aspect of Amazon‟s strategy.