Amazon.com a Strategic Assessment Essay

Pages: 13 (4490 words)  ·  Bibliography Sources: 10  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

SAMPLE EXCERPT . . .

The focus in the case study often reverts to the customer loyalty aspects of Amazon and its web design. The case also makes the point that the accuracy, speed and precision of the experience are contributing factors to profitability (Amazon Investor Relations, 2012). These are two strong contributions to Amazon achieving its revenue, profit, sales and service strategic plans on an annual basis. Without the build-out of the e-commerce infrastructure, Amazon would not have been able to deliver such an exceptionally positive and consistent level of customer experience. In aggregate, the e-commerce infrastructure strategies all contributed to this significant contribution (Lindic, Bavdaz, Kovacic, 2012).

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A second major contribution e-strategies have made to the company is the wealth of analytics, business intelligence (BI) in addition to advanced metrics and key performance indicators (KPIs). This is seen in how reliant their marketing teams are on actual performance of programs relative to standards and benchmarks, in addition to the patented recommendation engines the company has in place as well (Sun, 2012). This heavy reliance on analytics, BI and metrics has also fueled the development of greater insights into how customers search for products and services on their site, and has contributed to more advanced taxonomies for managing these tasks (Kim, Albuquerque, Bronnenberg, 2010). Amazon is using the analytics and BI-based insights and tools to further refine and bring greater accuracy into their search algorithms (Amazon Investor Relations, 2012). This development is also contributing to a more effective customer experience as well, as the continually improving search algorithms, integrated with personalized taxonomies based on recommendations (Sun, 2012), are being used for guiding customers to the best possible books, service and bundles, in addition to encouraging them to create content as well. Amazon was one of the first companies to integrate contextual search and taxonomies into a core part of their e-commerce systems, which significantly differentiated their catalog and content management systems (Chesbrough, 2011).

TOPIC: Essay on Amazon.com a Strategic Assessment of Assignment

In addition to infrastructure, analytics, and advanced forms of content and catalog management, the insights gained into how best to manage their complex supply chains Amazon have continues to be a major contribution to overall performance (Hofman, 2004). As Amazon is in the top twenty five supply chains globally as rated by Gartner, the insights gained into how best to use these processes to reduce costs, stay more customer focused with better demand management, in addition to managing costs all contribute to the company's profitability (Amazon Investor Relations, 2012). It is the continual development of these core business process areas that are making the company much more effective at controlling escalating costs, keeping their supply chains more focused on unique products and customer demand, while also making regional and global business development possible (Amazon Investor Relations, 2012). As has been noted before, Amazon is gradually shifting into an enterprise that competes on process-driven innovation, which has also helped their price optimization and price management algorithm development and rules engines as well (DiRusso, Mudambi, Schuff, 2011). All of these factors emanated from or are a core part of the overall investments in e-commerce and its underlying platform. The shift from a price competitor to one that focuses on knowledge and process-based competitive advantage also emanates from the investments made in e-commerce as well.

Analysis of How Amazon's e-Strategy Aligns and Supports Organizational Strategies

The organizational strategies at Amazon are designed to align product and services to market needs, ensuring customer centricity. This approach to organizational strategy is deliberately created with the customers' needs at the center. Given how customer loyalty and trust are the two most critical attributes Amazon is after with customers, it is to be expected that this approach to organizational strategies would be followed (Amazon Investor Relations, 2012). The e-strategy supports these organizational strategies from a supply chain, product lifecycle management, pricing, service and product line extension standpoint (Amazon Investor Relations, 2012). An example of this is hwo quickly Amazon was able to bring to market their initial Kindle e-reader, followed by the Kindler Fire e-reader, combined with a Kindler store of thousands of books at the same time. The alignment of e-strategy to organizational strategies made it possible for the new product development teams in Amazon to create not only a series of e-readers quickly; they also created an entire ecosystem of content at the same time. This was deliberate in design, following the Apple iTunes model as a means to define upsell and cross-sell revenue opportunities of content on the Kindle product line of e-readers (Amazon Investor Relations, 2012).

The alignment of the e-strategy to the organizational strategy was also predicated on creating a more efficient new product development and introduction (NPDI) process. Typically in retailers the new product development process is one that is marked with a significant amount of confusion as departments and divisions often struggle with their relative roles in each. In addition, the NPDI process requires planning around pricing constraints including Value-Added Tax (VAT) considerations for selling into global markets (Ward, Sipior, 2011). Amazon is using a series of Six Sigma process improvement approaches to ensure the alignment of pricing and product strategies to specific customer requirements (AlSagheer, 2011). The DMAIC methodology inherent in the Six Sigma methodology is being extensively used today in Amazon to ensure that pricing, product quality and customer service all stay entirely focused on the customer experience, galvanizing all aspects into a single, contiguous platform for delighting customers so they will return (Amazon Investor Relations, 2012). The Six Sigma program ensures measurement of performance against the goals of being more customer-centric, ensuring the e-strategies continue to contribute significantly to overall organizational strategies.

Business Factors That Serve As Catalysts of Amazon's e-Strategies

Of the many business factors that are catalysts of Amazon's e-strategies, the most significant are the continually changing needs, preferences and wants of customers globally. The mercurial nature of customers' changing tastes has an immediate multiplicative effect throughout the entire supply chain of the company. It also has a very significant effect on pricing management, optimizations and forecasting (DiRusso, Mudambi, Schuff, 2011). All of these factors, so critically important to the Amazon value chain, are the catalysts that move the Amazon e-strategies forward. The entire economic ecosystem of the company is predicated on staying in step with customer needs, anticipating them, and continually working to create value in the form of exciting new products and services (Amazon Investor Relations, 2012).

This is also an area of the Amazon business model that relies heavily on the analytics-based foundation of their e-commerce infrastructure as well. The analytics, BI and metrics of performance are all used to benchmark how effectively marketing is staying in step with sales, and how all functional areas of the company are listening and responding to the customer. This is seen for example in how effectively Amazon moves into entirely new markets (Kindle devices for example) using what is often called a blue ocean strategy (Lindic, Bavdaz, Kovacic, 2012). The ability to combine many of the external factors that help to quantify and explain a new market opportunity is put into the proper context when analytics are used. As is the case in their ability to execute on supply chain, pricing and service strategies, the same holds true in the area of new product and services development. Amazon relies heavily on analytics to interpret and make the most out of business factors favoring the development of new products and services. The majority of their innovation and new product ideas emanate from listening to customers while also working with suppliers to see what innovative technologies are becoming available (Amazon Investor Relations, 2012). These combinations of factors, all unified using analytics and BI, are what also differentiate this online retailer compared to many others.

Analysis and Assessment of e-Commerce Benefits to Amazon

The agility, speed of responsive and profitability of Amazon are all directly tied to their success in e-commerce, and more specifically, the knowledge gained and lessons learned. The greatest benefits that have accrued to Amazon as a result of their investments in e-commerce are the ability to quickly translate information and intelligence into process-based expertise and knowledge. Amazon continually strives to compete on the customer expertise, enriching and adding value to it as much as possible through innovative use of search technologies including taxonomy development, definition of role-based purchasing for corporate accounts, and the ability to construct catalog management systems that can be more effectively matched to customer requirements (Kim, Albuquerque, Bronnenberg, 2010).

These developments support the three core technology areas of personalization, recommendation engine development including constraint modeling, and taxonomy development for content management (Amazon Investor Relations, 2012). All three of these areas contribute to a reduced cost of sales, greater gross margins, and the more effective inventory turns over time. They also significantly… [END OF PREVIEW] . . . READ MORE

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