Description and Work Aspects of Amazon - Essay Example

Running Head: CASE STUDY-AMAZON Case Study-Amazon Introduction Amazon.com is an online ecommerce company that is a name of reckon with. Primarily known for selling books online, this company quickly expanded to offer a wide range of products and services to its consumers, including but not limited to cloud computing software, music, jewelry, fabric etc. This paper will attempt to present an external analysis of Amazon by conducting three analyses, namely, the Competency Framework Analysis, Porter’s Value Chain Analysis and VRIO Analysis. The aim of the paper is to present an understanding of the environment within which Amazon.com operates. Amazon.com Amazon.com is one of the pioneers of online shopping. Founded and operated by Jeff Bezos, this company began operations from Seattle but quickly spread in any different parts of the world including UK, Germany, Japan, Spain, Canada, Brazil and China. This company now offers a wide range of products and has even started offering innovative services such as cloud computing (Amazon, 2013). Amazon.com works on a consumer centric approach and it is on account of this approach that this company invests heavily in research and development and comes up with innovative products time and again. Despite the recession, Amazon.com has been able to enjoy a growth spurt of 14 percent (Stockport, 2010). Amazon Competency Framework Leadership Amazon was able to show a growth spurt even in recession because of the leadership it has in the form of Jeff Bezos. He revolutionized the use of internet and the way consumers shop by introducing an online book store. Previously, consumers were skeptical of shopping through the internet as they feared being cheated. However, this perception was altered through revolutionary entrepreneurs such as Bezos. Now online websites are being increasingly preferred over brick and mortar shops; especially for goods such as music and books. Furthermore, Bezos kept ahead of competition by focusing on the needs of the customers and adapting the company according to those needs. Innovation and Technology Change is the only thing constant in the technology industry. Since Amazon is included within this industry, it faces the pressure of being obsolete. It has to continuously upgrade itself and come up with new products in order to retain its presence in the industry. Technology has also made it possible for improving the reach of the consumers. With the introduction of Android and other such phones, the online store is even more accessible to the average consumers. They can even purchase, sell or use the website on the go. Customer Centric The company has always focused on the needs of the consumers. Any strategy or move that the company made, it made for the good of the customers. It catered to the needs of the customers by not just providing them what they need but also by predicting the needs of the customers that they were not even aware of themselves. CSR Policy With the increasing consumer awareness regarding the environment, companies in order to retain and attract consumers have to go green. They have to project and own a sustainable image. One issue that Amazon faces is the high amount of transportation costs it incurs while delivering products both locally and internationally. Porter’s Value Chain The concept of value chain initiated by Porter focuses on the fact that firms in order to remain profitable need to add value to every aspect of their supply chain. A typical supply chain therefore should add value to the final product and activities that do not add value should be revised according. The supply chain of Amazon includes the movement of goods from inbound logistics, operations, outbound logistics, marketing and sales and finally the service. This value chain is supported by certain activities known as the support activities. These include technology, firm infrastructure, human resource management and procurement. Inbound Logistics: The first part of the value chain is receiving products from the various suppliers, manufacturers and distributers. The products are then sorted and categorized properly in order to allow for a smooth functioning of the entire operations. Operations: Operations include properly marketing these products and making them available for the customers. Here the focus on the company is on the customers. The management ensures that all operations are conducted to keep the consumers happy and satisfied. Outbound Logistics: The next part of the supply chain is sending the product to the customers. Amazon initially began with a small warehouse from where it managed its outbound logistics. Later the company expanded its fulfillment centers and placed them at strategic locations (near the airport) of various countries which allows for a smooth movement of goods. Additionally this decreases transportation costs and the time it takes to deliver the product to the final customer. Marketing and Sales: Marketing over the internet is relatively cheaper. Amazon also asks buyers to writer reviews of the products so that it would help the prospective buyers make an informed decision. These reviews have considerably helped the operations at Amazon since it is a form of word-of-mouth publicity through the internet and word of mouth publicity greatly aids sales for internet products among Generation Y and Z (Cho, 2004). However, one issue for the company is that despite the company being a pioneer in internet shopping, consumers still search on Google for shopping rather than Amazon. Service: The services offered by Amazon are also consumer centric. In order to improve the experience of the customers, Amazon launched its Kindle whereby consumers could download and access online books easily. The support activities such as technology, firm infrastructure, human resource management and procurement further improve the experience of the consumers. The company is intensively technologically driven. Examples of such technology are its Kindle and cloud computing software that has changed how consumers use the internet. In terms of human resource management, the company hires personnel after reviewing the needs of the consumers and filling the gap with appropriate skills. In terms of procurement, Amazon has made alliance with numerous publishers and other distributers so as to increase the range of products available at the website for the final consumer. VRIO Analysis Value: The Company provides immense value of the consumer. It does this by constantly innovating with new products. When Bezos launched Amazon, it was the first of its kind store that allowed consumers to shop online for both used and new books. Later, understanding the changing needs of the consumer, the company kept on improving its products and their range (Kangas, 2003). Value was also provided through technological advances such as Cloud computing and Kindle that not just predicted the needs of the consumers ahead of time but also changed the way consumers use internet. Rarity: While the company does not provide any rare kinds of products, but it is able to remain as a leader through its extensive range of products. While these can be easily promoted through another website, none have the brand image that Amazon enjoys. Furthermore, Kindle and Cloud Computing Software are products that have yet to be offered by competitors and thus Amazon does enjoy rarity in the market (Hill and Jones, 2012). Imitability The services offered by Amazon can be easily imitated. This is primarily because the price of setting an online store is quite low and there are companies offering similar products very business interested in setting up an online store would only require the initial investment of buying a domain and creating a website. Amazon’s own case is an example of such. However, Amazon has been able to establish a good brand image and has been a pioneer in the industry. It has also been able to enjoy economies of scale which would quickly force the new entrants out of the market as they would have difficulty matching the price of giants such as Amazon and eBay (Walters and Walters, 2006). Organization: The Company has been able to prosper because of the above stated advantages. While the company continues to grow, it adds the needed skills in the organization to continue with its growth. The focus on the consumers and on technology is the driving forces of profit and growth for the company. Discussion and Conclusion In light of the above discussion, it can be concluded that Amazon enjoys a good brand image in the market despite the high competition in the industry. Since the industry is right now in its growth stages, it presents a good opportunity for Amazon to improve upon its customer base and recruit more customers through decreasing their fears regarding online shopping. Amazon has a good online presence. It offers a wide range of products and services. Some of these are innovative to an extent that they have changed the way that consumers approach online selling. Perhaps the biggest opportunity that Amazon has right now, being a global industry, is expanding into new geographical regions. The market of Asia is largely untapped by Amazon and Asia being one of the most populated areas presents high potential for the organization. Amazon faces its biggest threat from competitors that have managed to generate both online and physical presence. This includes mainly retail stores such as Wal-Mart and Tesco. EBay, particularly, provides high competition as it allows customers to shop online and choose between getting the product delivered or visiting an eBay store; whichever is convenient for the customer. While they are only in the market of products, Amazon still faces high competition. Amazon has great potential right now given its strong position in the market and also the strong leadership it has in the shape of Jeff Bezos. It needs to continuously provide better products and services to retain its position in the market. References Amazon, 2013, About Us, Retrieved from http://www.amazon.com/ [Accessed April 7, 2013] Cho, J., 2004, Likelihood to abort an online transaction: Influences from cognitive evaluations, attitudes, and behavioral variables. 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