Operations Management and Decision-Making Models

This document discusses the operations management and decision-making models that have contributed to the success of Amazon. It explores their customer-centric approach, efficient supply chain, and global expansion. The document also highlights the impact of e-commerce on the retail industry and the challenges faced by local retailers with the entrance of Amazon in Australia.

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Operations Management and Decision-Making Models

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Answer 1
In 1997, Amazon made a humble beginning with the selling of books online in USA. However,
the founder of the company, Jeff Bezos was never fulfilled in being merely a book store, and
always dreamt of transforming Amazon into “The Everything Store” (Majed et al., 2018). He
wanted Amazon to have a wide variety of products for the customers to choose from, and
purchase them at affordable prices. This ambition gradually sparkled the innovation of new
products and services. In 2006, the company introduced Amazon Web Services (AWS) that
offers reliable, and low-cost cloud computing services to the individuals, companies, and the
government all over the world.
In 2007, Amazon proved itself to be a technology firm with another biggest development for
readers, called “Kindle”. This e-book app allows readers to put over 1.5 million books at their
fingertips. Bezos was very much inspired by the way Apple used iTunes to grab a large part in
music, and likewise he designed Kindle to do the same with books (Galloway, 2017). Later on,
the company also started to diversify into other product lines from clothing, footwear,
accessories to electronic and personal care appliances.
One of the Amazon’s corporate strategies that resulted in such a rapid growth is their customer-
centric approach. The company had always been putting the customers at first priority over
profits. Jeff knew that only customer satisfaction and their loyalty could make the company able
to achieve great heights in future (Sanders, 2016). The company thus, continued improving the
past accomplishments in order to provide a great shopping experience to the customers. The
outlook that profitability was not Amazon’s primary purpose is a common theme in the

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company’s history. This is one of the main factors that actually transformed the company into
“The Everything Store” that Jeff always wished.
In addition to this, Amazon had been strongly emphasizing on creating a productive work
culture. Jeff always persuade the employees to love their work over other things. He did not
believe in the concept of work-life balance, which formed a passionate and highly committed
workforce for the company. Another secret behind Amazon’s huge success is their highly
efficient, skilled, and innovative supply chain (Garner, 2018). The organization’s constant efforts
to meet customers’ needs on time transformed Amazon into a leading retail company all over the
globe. It forced other market players in the industry to change the way they manage their supply
chain system.
Moreover, a smart combination of IT, multi-tier inventory control, a wide network of
warehouses, and the efficient transportation has strengthened Amazon’s supply chain among all
the key competitors across the globe. Also, the company’s relentless investment of around billion
dollars in the technological and infrastructure development (Melnyk, and Stanton, 2017). As a
result of which, Amazon also became an unbeatable leader in the quick delivery process earlier
than a number of competitors all over the world, with around hundred warehouses in America
alone. Today, Amazon has become “The Everything Store”. There is no surprise if the company
becomes “An Everything Company” in the near future.
Answer 2
In today’s 21st era, globalization of world trade has become increasingly prominent as companies
are seeking to grow by expanding their operations overseas. Amazon is among one of the leading
USA based technology and retailing company that has successfully expanded its business in

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different countries. Globalization of world trade has provided them an effective access to the
new markets, customers, resources, skills, and capital which are useful for smooth operations
(Peng, 2016). Amazon has become more efficient and streamlined by extending their geographic
area of business operations significantly.
In the light of globalized trade, the basic operations of Amazon have improved as the company
has set up offices in various countries to manage daily activities including distribution and
logistics, warehousing, and research & development. For managing these aspects of operations,
Amazon utilizes human resources in each county, along with the investment in resources for
establishing coordination among distant locations (Gong, 2015). Moreover, the company’s value
chain aspects of operations have become easier and cheaper due to globalization. It has also
lowered the cost of information and transactions for the company with the great incentive to the
process expanding international markets.
There has been observed a direct and positive relationship between Amazon’s operational
management and their performance. The company has gained economies of scale, and has
performed better than domestic competitors in terms of reduced costs, enhanced sales, and
improved market position (Grant et al., 2017). There has been greater impact on Amazon’s
supply chain operations due to availability of vast knowledge, and resources across their
international operations.
In addition to this, Amazon has developed better position to benefit from world trade as they can
have gained global reach and have removed the risks of failure with the years passed. Amazon
being a huge multinational firm, involve buying and selling of goods and services at a very large
scale, which has actually resulted in lower prices and operational cost savings to significant level

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(Reid, and Sanders, 2015). Another aspect of operational management that has experienced a
positive impact from the globalized world trade is procurement and sourcing methods. These
methods significantly enable the organization to acquire materials. Supplies, tools, and labour
more efficiently. For instance, India and China provides low cost yet knowledgeable workers
who have the potential tolet the company save a tremendous amount of production and
operational costs.
Furthermore, Amazon’s inventory management is also highly affected by world trade. The
inventory levels has been increased due to dependency on outsourced stock (Cho, and Lee,
2017). This is mainly due to the uncertainty sin the product delivery because of bad climate or
port issues from international markets. In order to manage this aspect of operation smoothly, the
company adopt safety stock or additional stock to prevent shortages, and to protect their supply
rate effectively.
Answer 3
Today, Amazon has surprised everyone by becoming “The Everything Store” from “A Book
Store”. However, Amazon is not the only one who took great advantage of e-commerce, there
exist many players as well who are operating successfully after starting their life online (Lee et
al., 2017). While the in-person shopping experience has been critical to the market due to the
necessity of customer education to complete a sale , there is no deny that e-commerce has
changed the shopping experience of customers to a significant extent all over the world. The
online selling plans have reduced the marketing efforts and maximized the profitability of
businesses.

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One of the key reasons why e-commerce is trending today is its ability to provide convenience to
the customers. Customers can easily purchase whatever they want just on a click, at anytime and
anywhere. Moreover, they can compare a large number of products and services without hassle
on a single screen, making their shopping experience amazing and hassle free. Another reason is
the flexibility that e-commerce provides to the consumers all over the world (Haridasan, and
Fernando, 2018). It allows shoppers to consider a purchase for as long as they require without
feeling stress. While in-person shopping creates an “all-or-nothing” situation, e-commerce
facilitated customers to purchase with confidence.
In addition to this, e-commerce platform enables automation by creating amazing opportunities
for customization thus connecting shoppers with the products and processes they resonate with
the most. However, e-commerce cannot replace the in-stores completely due to some major
reasons, among which technology problem is the major one (Wasilewski et al., 2016). This might
occur due to slow speed of internet or ineffectively designed online sites. Such an issue can
completely spoil the consumer’s interest and shopping experience, making the online stores less
acceptable.
Moreover, the competition among e-retailers has increased today significantly as everyone
business wants to expand and save operational costs. Apart from this, an experience of a face to
face communication with the sales persons who have complete knowledge about offers and
products cannot be replaced ever by online stores for customers (Ingaldi, and Ulewicz, 2018).
This is mainly because during in-person shopping process, buyers can get easy access to all the
information they require to take an intelligent purchasing decision. Also, their product or brand
related queries are also responded faster by the in-stores. In case of e-commerce, customers find
it quite time consuming to interact with online retailers and get their query resolved on time.

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Also, a real value of a brand can be felt during in-store shopping experience. Everything from the
interior to the staff behavior, and technology on display, e-retailers can provide the similar
experience to the customers, but not with the same impact as created by offline stores
(Patwardhan, and Gawai, 2017). No doubt, e-commerce has led to decline in offline shopping
sales to a considerable level, but they cannot completely replacephysical stores due to the “touch
and feel” that only in-person shopping experience could give.
Answer 4
Amazon has got an image of "the worst possible corporate citizen" after declaring its next arrival
to Australia. The entrance of this giant online shopping has caused the retail industry of Australia
to become completely exposed to the international competition. After eBay and Kogan already
formed a good position in Australian retail market, Amazon has also decided to put a remarkable
downward pressure on the prices of goods and services just because it is ready to sacrifice the
profit over gaining customer satisfaction and loyalty (Head, 2017). Since Amazon is superior
than a number of Australian leading local retail companies combined, it would create a long term
favorable implications for Australian consumers, while unfavorable implications for Australian
retailers.
The impact is going to be positive for local consumers because they would get a wide variety of
products and services to choose from at very lower prices than offered by local retail companies.
As a result, these local retailers such as The Iconic and Woolworths could be forced to reduce
their product prices in order to retain their existing customers (Xu et al., 2017). However, the
"Amazon Effect" for Australian retail could be mixed, where some companies see Amazon's
entrance as a healthy competition as they would be able to increase their efficiency and

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operational management. As per the investment bank of Australia, this competition could led to
local retailers investing more in online data to neutralize the Amazon's presence and the rate of
online penetration could be accelerated (Grimmer et al., 2017). On the other hand, some retailers
like Harvey and JB Hi-Fi believe that Amazon's arrival would decrease their current market
share and profitability.
In addition to this. Amazon's big USP (with its Prime Now Subscription) across the globe is
something that could be not easy for the local retailers to replace in the Australia's meager
population and vast geography (ABC News, 2018). In fact, the most efficient drone is hard to
make it reach out the rural population in a short timeframe (as provided by Amazon).
According to a report by Morgan Stanley, the discount stores of Australia such as Target and
Kmart would be affected the most by the Amazon's arrival, as they could lose more than 350
million dollars of revenue by the year 2026. Along with the lower prices, Amazon is likely to
give a tough competition to the retail industry in terms fast purchasing and shipping facility and
high quality of products. In other words, this giant e-commerce driven firm has the potential to
take the Australian economy forward (O'Connor, 2017). Its entrance could create a big threat to
local retailers, only if they don't have their game face on. However, it should be noted that as
long as Australian local retailers continue to act in their customers' best interest, there is nothing
bad going to be happen with them.

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