Managing the Digital Enterprise of Amazon and Dell Companies - Case Study Example

Managing the digital enterprise: A case study of Amazon and Dell companies Introduction The adoption of a proper business model has been demonstrated as one of the strategies that companies use to enhance their performance and retain their customer base. Despite the deficit on research on the benefits of business models, a number of companies like Dell and Amazon have proved that business models adopted by an organization influences its ability to succeed. A business model is defined as an approach adopted by organizations to integrate the description of a product and services provided by an organization, the level of information movement within the organization and a descriptive analysis of the sources of income for an organization (Kraemer, Dedrick, & Yamashiro, 2000). It demonstrates the degree of innovation of an organization and their responsiveness to the consumer needs and changes in taste preferences. With the introduction of technology, e-business models have been developed that allow businesses to demonstrate their abilities and responsiveness using web based centres. A business model, whether tradition or e-business model demonstrates the approaches adopted by an organization to make profits (Fife & Pereira, 2006). In this paper, the business models of Dell and Amazon companies will be analysed to demonstrate how each of the approaches have affected the performance of the businesses. In implementing the business models, these organizations have their specific community and target audience in sight, which affects the nature of their models. The target audience served by the organizations websites will also be analysed to demonstrate how the companies use their sites to attract their customers. Dell and Amazon business models The development of web dependent business models as have been done by both Dell and Amazon requires the understanding of the characteristics of web-users. Consumer behaviours constantly change and is influenced largely by the current occurrence in the market, competition and the entry of new players in the industry. Companies conduct studies on consumer behaviours to determine the nature of their web contents and this is exhibited by both dell and Amazon (Kraemer, Dedrick, & Yamashiro, 2000). Websites therefore incorporate business news, entertainment articles and educational activities aimed at attracting and arousing the interests of the consumers. In organizations that conduct online shopping, procurements, sales and advertising like Amazon and most recently Dell, a proper e-business model is of great significance (Kuballa, 2007). Dell Corporation launched their e-business approach in 1990s and this has enabled it to make inroads into new markets while designing products that suit the specific needs of the consumers. According to this model, the company maintains a virtual operations and sales system in which it operates without any physical outlets and intermediaries to link it with the consumers. With its sound supply chain management approach, Dell can sufficiently serve the orders of its consumers within 24 hours of receiving the order (Fife & Pereira, 2006). One of the business models used by Dell involves the employment of e-business in enhancing its supply chain management thus enabling the company to meet the consumer’s needs in time. In 1996, Dell Corporation opened its website www.dell.com for online selling purposes and designed it specifically to allow for interactive approaches with the consumers (Kha, 2000). The business model as practiced by Dell Corporation is also punctuated with consistencies in the development of new innovative products, which are availed on the company’s website for consumers to review. The innovative approach focuses on the key competencies of the company and the ability of the consumers to make their personal inputs on the products online before making their orders (Fox, 2000). Amazon has cut a niche for itself as one of the leading online book and music seller controlling a large percentage of the total books sold online worldwide. The success of the online business as adopted by the company is also attributed to the business models that the company has adopted. As part of its guiding practice, the company seeks to adopt a responsive approach to the needs of the consumers, who they interact with from their website. The customers are allowed to comment and preview a book, comments that will be used by the business to remodel their products to meet the demands of the consumers. As a means of marketing and attracting more consumers, Amazon website provides value for the users regardless of whether a purchase has been made or not (Kha, 2000). One of Amazon’s key models is the customization of mass production, which enables the company to broaden the range of services they offer. Similar to Dell, Amazon also handles physical products and thus makes significant use of its information systems to interact with the customers. The company also seeks to build a strong customer allegiance by consistently developing products that meets their needs and being responsive to their demands. Target audiences served by Dell and Amazon websites Dell has maintained its high profile consumers through persistent online marketing, procurements and sales thus contributing to increased sales and profits. Dell’s customer base is grouped into two, which include the corporate world who are the large-scale consumer of its products and the small-scale consumers who include students, homes and small offices within the United States and in other parts of the world. With such a diverse class of consumers, Dell has adopted a cautious approach, which seeks to satisfy both the consumers at different levels through the use of e-business (Cravens, Piercy & Prentice, 2000). Certain brand names are marketed within the corporation’s website targeting specific consumer segments. For example, a detailed description of the Optiplex, Latitude and Precision electronic products by the company within its website demonstrates the target market that the company addresses. This kind of detailed and targeting approach of advertising within the company’s e-business model enables it to reach out to different segment of the market with its diverse products at each specific time. In the advert for these products, the company focuses on the product’s long life-cycle, reliability and serviceability; features that large and medium sized companies seeks in computer products. Other products by the company such as Dimension, Inspiron and XPS that are also described within its website targets the interests of small-scale consumers like home users, students and small offices. As opposed to the qualities emphasized in the other products, these seek to emphasize value, high performance and quality (Barnes & Hunt, 2001). Amazon on the other hand deals with virtual products, which ranges from songs, books and other academic materials. This makes the company’s website a highly integrative site that appeals to the diverse consumer base. Academic materials offered by the company are marketed to the students, academic staffs and other consumers who make their orders from the company’s online sales centre. With academic materials need by a wide range of the general population, the company has designed its website to enable the different users to have a free interactive time when making orders, previewing a document or making in inquiries (Barnes & Hunt, 2001). Features of the websites Amazon has developed one of the best websites that has enabled it to serve the different interests of its customers and attract prospective customers. It is considered as one of the most customer friendly websites when compared with Dell, AOL and even Yahoo. The website allows for responsive service, which makes it possible for the different needs of the consumers to be addressed promptly by the management. Through the websites, consumers can be able to negotiate for a discount or a reduction of the price for the good being sought making one of the revered online business sites in the United States (Currie, 2004). With most of its products being books, music and videos, consumer views and comments is highly essential. The website provides the possibility of the consumers to post a comment, review or criticism of the different products in the site every time they visit. These comments are considered by the management of the company and enable them to improve the quality of their services at any given time (Ignatius, 2009). The website also offers custom web page and is considered as the first company to begin customer salutation by name though electronic interaction. Communication between the company and the consumers is enhanced using emails and instant online chat features. Consumers can also order for their products by using their credit cards, Payoneer and other online payment systems making the website flexible and friendly (Barnes & Hunt, 2001). Dell’s web also has significant two-way communication feature that enables clients and the company to interact at different levels. The company has integrated dellideastorm.com to allow the consumers to post their comments on new products and services and also to allow them to track the different levels of product design and development. Customers can also share their stories and experiences on Dell products by uploading their videos and stories. There is also room for posting comments by the consumers, a feature that allows the company to act on the different needs of the consumers at any given time (Baumann, 2010). Competitive pressures The business model adopted by Dell was significantly influenced by the rising competition in the computer and electronics market. With the introduction of other American and international computer manufacturers like Apple, Samsung, HP and Toshiba, the company had to develop a better and more efficient approach of reaching to its consumers. Apple developed physical retail shops, a practice aped by Samsung and other players. This made this approach flooded and ineffective. As a result, Dell developed its e-business models to enable it create an environment of interacting with the consumers across borders while getting to respond promptly to their concerns and problems (Schepp & Schepp, 2009). Amazon success in attracting and retaining consumers is attributed to its online marketing approaches, a model that was prompted by increased market competition and pressure. The site also provides the consumers with an easy to navigate website, marketing tool that has enabled the company to remain profitable despite high competition from other online companies in the United States. Competitors to Amazon include the American online business (AOL), Yahoo and other physical music and book store in the country. The introduction of the online music store by Apple Inc also provided another front for the company, thus increasing its resolve to develop a proper e-business model and platform (Weill & Vitale, 2001. References Barnes, S., & Hunt, B., 2001, E-commerce and V-business: Business models for global success, Oxford: Routledge. Baumann, C., 2010, Analysis of the website www.dell.com: Corporate web communication, Grin Verlag. Cravens, D., Piercy, N. & Prentice, A., 2000, Developing market driven product strategies, Journal of product and brand management, 9(6), 469-388. Currie, W., 2004, Value creation from E-Business models, Burlington: Butterworth-Heinemann. Fife, E. & Pereira, F., 2006, Meeting consumer needs on the internet: Successful business models, Marshall School of business, University of Southern California. Fox, C., 2000, E-commerce business models: business models that have succeeded and business models that have failed: international case studies. [Online] Available at: http://www.chriscfox.com/eCommerceBusinessModels.pdf [Accessed 26 Oct. 2013] Ignatius, A., 2009, Analysis of dells business strategy, Grin Verlag. 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