Amazon Company: Achievements, Obstacles and Rectification

This report reviews, examines and evaluates the strategies and plans adopted by Amazon, to give strong competition to its competitive companies in the market. The obstacles faced by the company are highlighted and how it overcame the interruptions is presented in this report. The report also covers the risks, risk barriers, operational strategy, operation management and strategic decision making of Amazon.

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Engineering Management

Abstract
This research’s spot light is on Amazon Company. The research ensures to review, examine and
evaluate the strategies and plans adopted by Amazon, to give strong competition to its
competitive companies in the market. The obstacles faced by the company are highlighted and
how it overcame the interruptions is presented in this report. The other perspectives of its
strategies and growth are reviewed. Subsequently, the achievements and problems, why the
company came down, its risk barriers and rectification are the aspects that are reviewed. The
positive perspectives determined about the company is that, it accepts its failure and has patience
to await for long term benefits. It is observed to have excelling operational excellence.
Additionally, it is also determined that Amazon believes in customer obsession when compared
to competitor obsession.

Table of Contents
1. Introduction.......................................................................................................................................1
2. Risks...................................................................................................................................................1
3. Risk Barriers for Amazon.................................................................................................................2
4. Problems faced and how Amazon overcame it?..............................................................................3
5. Overcoming the Risk Barriers..........................................................................................................3
6. Operational Strategy.........................................................................................................................4
7. Operation Management and Strategic Decision Making................................................................5
8. Information Technology and Amazon.............................................................................................7
9. Evaluation..........................................................................................................................................7
10. Conclusion......................................................................................................................................9
References................................................................................................................................................11

1. Introduction
Based on revenue and market capitalization, Amazon is largest Internet retailer in the
globe. Depending on its sales, it is ranked as the second largest company. It produces
electronics like Fire tablets, Echo and Fire TV (Amazon.in, 2018). Amazon has significant
revenue in cloud infrastructure services like IaaS and PaaS (Srgresearch.com, 2014). Along
with online bookselling, it is also known for video and MP3 streaming, video games, audiobook
downloading, and software. In North America, Amazon is at number one position, for retail
service (Digital Commerce 360, 2018).
It also sells a few low-end products. It operates separately with a different retail websites
for the customers in the following countries- United States of America, Italy, United Kingdom,
Ireland, Canada, France, Germany, Netherlands, Mexico, Australia, Japan, Spain, China, Brazil
and India. It even allows international shipping of certain products, to some selected countries.
Amazon believes in customer obsession instead of competitor obsession. It has eagerness in
investing and pioneering. Moreover, its biggest positive approach is it willingly accepts failure
and patiently thinks about long term benefits and success. This is why it is pride on its
operational excellence.
The objective of this report is to understand the achievements, obstacles faced and
rectification for Amazon Company. The risk barriers for Amazon will be investigated, where
the company will be reviewed, examined and evaluated based on its adopted strategies and
plans, for competing with the other companies in the market.
2. Risks
Some of the serious risks for Amazon includes (Kline, 2017):
1) Intense competition
2) Rapid expansion straining management
3) Doing business throughout the world.
4) Shipping costs
5) Loss of data and security breach issues can however be a serious risk.
6) Risks related to web operations.
7) It faces competition in stock investment, revenue growth share price (Downie,
2015).
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These risks can slow down the growth of online retail business, by affecting a huge profit.
The report of 2013 determined that, Amazon failed to meet its UPs and FedEx due to shipping
issues. It resulted in customer dissatisfaction, due to delivery delays and caused refund issues.
The credit card breach is an extremely high risk that can harm the customer and company's
relationship (Kline, 2017).
3. Risk Barriers for Amazon
For Amazon, the risk barriers include can assessing the probable risks which let the
company to fall. The following prevention can be considered (Bergström, 2013):
1) List out all the potential scenarios, that impact on Amazon and makes it to go
down.
2) Calculate the listed potential scenarios’ probability.
3) Ensure to multiply the probability for all the scenarios, individually, by
estimating their severity. Here, consider the cost and time for each scenario.
4) Later, every single scenario must be plotted using the risk matrix, which shows
its weightage and ranks. Based on this determination, the scenarios can be
prioritized to avoid the future risks.
5) Implementing effective strategies that can mitigate the risk, and release the two
controllable energies like barriers and redundancy. It must ensure an in-depth
defense system to physically grasp these energies.
6) Redundancy control is a potential barrier, which can cool down various
emergency-cooling systems, in a nuclear plant.
However, along with the barriers, it is important that Amazon must have other business
management strategies and operations to function correctly. Even, right decision making plays a
significant role in mitigating the future risks.
Overcame Risks
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To resolve the risks related to security breaches, Amazon used third party technology
and ensured to secure the information of the customers from security breaches and data loss.
This helped Amazon to stop the trouble caused by the hackers (Rao, 2011).
4. Problems faced and how Amazon overcame it?
The biggest problem for Amazon was overpowering Wal-Mart. Because, Walmart is not
just a shop, it is the biggest retailers present in the entire world. Moreover, Walmart had a
strategy which Amazon hardly had (McGee, 2018).
Today, Amazon surpassed Walmart and the ultimate strategy was to compete with the
prices offered by Walmart. Amazon has successfully becomes a leader for on line business with
its sustainable and competitive advantage strategy.
The other challenges faced were plotting its own brand in the market. This problem was
resolved by working on its brand quality and increasing customer loyalty. To plot new brands it
faced problems like premiumisation i.e., least interested customers and resulted in fall in the
sales. To add the problem, amazon also had to cope up with the competitive market (McKevitt,
2016). No nothing can stop the growth of Amazon (Enomoto, 2017) (Govindarajan, 2005).
Because, it has become a trillion dollar corporation (GreyB, 2018). Moreover, its retail sector is
expanding (Cheng, 2017) (Forbes.com, 2018).
5. Overcoming the Risk Barriers
To resolve the risks the general strategy of Amazon is to have an innovative approach,
for the online retailing business. It is gripping to the ecommerce market. The investigation on
Amazon determines that, it is has a disruptive business model, which relies on innovation which
gives life to a new market and a new value network (Robischon, 2017). It is this new market
which disrupts the present market and the value network (Hallam MBE, 2017).
Amazon focuses on generic competitive strategies which help the e-commerce business.
Amazon follows Michael Porter’s model, for developing its business. It is highly competitive,
and enforces intensive growth strategies for its business growth, which is expanding drastically.
It is believed that Amazon succeeded in its e-commerce market globally with effective
implementation of generic competitive strategy and intensive growth strategies. Moreover, the
other strategy is that, it offers its services for affordable price. It intensive growth strategies
stresses on the following (Smithson, 2017):
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1) Market Development
2) Market Penetration
3) Product Development
4) Diversification
Amazon’s generic competitive strategy works on cost leadership for building the e-
commerce competitive advantage with a thorough advancement in the infrastructure of
information technology. Further, its strategic objective is to invest more in Research and
Development (R&D). This investment helps in optimizing the IT resources’ performance. On
the other hand, cost leadership generic competitive strategy motivates Amazon.com Inc. to
decrease its cost, which helps in attracting customers. Therefore, the strategic objective leaves a
great impact on the marketing mix of Amazon. Hence, competitive advantage is gained by
Amazon by implementing generic strategy of cost leadership. Whereas, the competitive
advantage supports to fulfill the vision and mission of Amazon, in the online retail market
(Smithson, 2017).
Amazon always brings a new strategy and the recent one is, “Amazon Go.” This is a
technology which Amazon has announced, where the Amazon account holder with the Amazon
Go app on a smartphone can avoid the hassle of waiting in the queues. Such customers can walk
in to the shop, then they can pick anything they want and can just walk out without any check.
This is an interesting strategy used by Amazon which can attract many buyers. Similarly,
Amazon Echo is released into the market. It is a smart speaker named Alexa which helps the
users with music streaming and much more. It has plan of Amazon Fresh, which is a service to
deliver fresh groceries from local shops and markets. The other business strategies of Amazon
are Amazon Dash wand, Amazon prime Air fleet and so on (Dudovskiy, 2017).
6. Operational Strategy
In 2015, according to the report of The New York Times, Amazon became the most
valuable retailer in the country. It proved to have strongest ability, to extract more from its
employees. Its market value increased to $ 250 billion, by surpassing Walmart in the United
States of America (Sommer, 2017). The employees of Amazon has plays a vital role in its
success, as they lead a secret life with a lengthy confidentiality agreement. The employees are
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taught to think big. Additionally, the letter written by the CEO of Amazon proved that, the life
of the employees working in Amazon is not easy. It has prioritised the employees and has
compensation is competitive. They strive hard to please their customers. It ensures to maintain
the work culture. It has sharpest, most committed colleagues whose leadership principles rely
on “never settle” and “no task is beneath them.” To ensure effective packing happens, the
workers are monitored using electronic systems. The staff working in Amazon, is required to
use their own set of self-reinforcing management. It functions well based on implementing
continual performance improvement algorithm on the employees (Kantor and Streitfeld, 2015).
The above section stresses on employee productivity enforced on the employees.
7. Operation Management and Strategic Decision Making
As Amazon is the fourth most valuable public company in the world, it has to work
effectively to stay competitive. At present, the revenue of Amazon is 177.866 billion (2017). It
has increased nearly 30.8% from 2016, with 135.987 billion. It has nearly 566,000 employees.
And its profit is $ 3.033 billion according to 2017 (Jurevicius, 2018).
Amazon works on the following strategic decision areas (Ferguson, 2017):
1) Goods and Services’ Design: In operation management, the strategic decision
includes the design of the organizational output. The concerns are addressed
using technology by Amazon. For instances, to ensure effective retail service,
advanced information and communication technology is used to increase
customer convenience.
2) Quality Management: Here, the strategy is to increase the operational output's
quality, just to provide exceptional customer satisfaction. The operation
management focuses on constant improvement in the e-commerce business. The
organizational culture is used by Amazon to assist the innovative ideas of their
employees.
3) Location Strategy: For operations management, the strategic decision also
revolves around the resource accessibility and market. For Amazon, more focus
is projected on a strategic location for the warehouses. These warehouses must
be ideally near to the largest online customers, to fulfill the online retain service
on time.
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4) Process and Capacity Design: The processes and capacity in production must
be optimized, is what the objective of operations management. To ensure the
optimization, the strategic decision implements on usage of extensive automation
for streamlining the processes of the business. For instance, automation in online
retail service increases the ability to accept more number of orders. Thus
increasing the sale. Therefore, operations management can help in enhancing the
e-commerce and its operations, through automation.
5) Layout Design and Strategy: For better strategic decision, the operations
managers must ensure to optimize the movement of human resources,
information and materials in the company. Amazon has made a point to work on
its layout designs, by improving it and aligning it with the technology. For
instance, the warehouses of the company must ensure that the items are
organized based on the computerization policy. Then, the space must not be
wasted and utilized effectively.
6) Job Design and Human Resources: It is important to improve Human resource
as a strategic decision, to ensure the operations management in the company. The
third-party employment agencies and the in-house departments must work hand
in hand, for recruitment of effective employees, who can serve better for
Amazon.
7) Supply Chain Management: The operations management has concern for the
supply chain management, with effective decisions.
8) Inventory Management: It ensures to maintain the optimal inventory ordering
and holding. The strategic decision focuses on finished goods inventory by
maintain the just-in-time inventory management. For instance, if the inventory
management successfully fulfills the just-in-time inventory management, then
there will not be any issues for the good to be received for the designed
warehouse centers. Moreover, it will be easy to deliver the goods on time to the
customers and this helps to maintain customer satisfaction and brand loyalty.
9) Scheduling: The shipping and delivery operations are important to be managed
with an effective schedule.
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10) Maintenance of technological assets: Reliability and stability are stressed in
strategic decision making. The maintenance in Amazon revolves around taking
care for the technological assets. The employees are provided training to take
care of these assets, by effective maintenance. Because, the technological assets
play a major role in e-commerce business. For instance, in packaging. However,
the technology implementation also improves the operational efficiency of the
business.
The business productivity of Amazon is denoted by the workers’ productivity including
the automated systems. Their productivity serves only to fulfil customer satisfaction to deliver
the product on time. For online retail operations, the employees are required to hasten in
packing and shipment of the orders. The below listed criteria are used for measuring Amazon’s
productivity (Ferguson, 2017):
a) Inventory items processed per hour (inventory productivity)
b) Orders fulfilled per hour (Amazon Fulfillment Center productivity)
c) Inquiries answered per day (customer service productivity)
8. Information Technology and Amazon
Technology and Amazon work hand in hand and both cannot be separated, because of
their significant benefits. The architecture of Amazon technology manages millions of back-end
operations on a daily basis (Layton, 2018)
9. Evaluation
The close competitors of Amazon are determined as follows (Jurevicius, 2018):
a) Alibaba Group
b) Wal-Mart Stores
c) Netflix Inc.
d) Apple Inc.
e) eBay
f) International Business Machines Corporation
g) Facebook
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h) Alphabet Inc. /Google Inc.
i) Microsoft Corporation
j) The rest of the internet companies
The other potential competitors are (Jurevicius, 2018):
1) Both online and offline multichannel retailers.
2) Distributors
3) Vendors
4) Product manufacturers
5) Publishers
6) Web search engines
7) Social networks
8) Logistics services
9) Firms that provide Information and Technology services.
10) Web portals and so on.
SWOT Analysis
The following section helps to evaluate the current internal strengths and weaknesses
along with external opportunities and threats for Amazon (Jurevicius, 2018):
Internal Strengths
1) The cost of the service is less.
2) It has largest merchandise options.
3) It has various third party sellers.
Therefore, the above mentioned aspects help Amazon to perform well.
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Internal Weaknesses
1) For retail business, it has extremely poor margin.
External Opportunities
1) Increasing demand for goods which have private label.
External Threats
1) There are high risks for data breach.
10.Conclusion
The research concludes on how Amazon evolved. It is observed that today Amazon
holds control of various products such as, electronic devices, payment, apparels, food, furniture,
toys, jewelry, Fire tablets, Echo and Fire TV and mush more. It has some low end products too.
On the other hand, it carries out such a huge business with several different retail websites for
different countries, throughout the world.
The evaluation of the company is done using the SWOT analysis. Its intensive growth
strategies stresses on Market Development, Market penetration, Product Development and
Diversification. The achievements, then the problems faced and its rectification, for Amazon
Company are investigated. The risk barriers for Amazon are researched and determined. The
adopted strategies and plans by amazon, for competing with the other companies in the market
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are reviewed, examined and evaluated. The study shows the impact of technology on Amazon,
because it is more dependent on technology for accomplishing all its operations and to increase
the productive and success rate of the business.
The generic competitive strategy of cost leadership and investment in R&D helps
Amazon to meet the competitive advantage and the required infrastructure for information
technology. They consider cost as a major factor to attract customers and it works on its
marketing mix to fulfill the vision and mission of the company in the global online retail
market. The operations management aims to optimize the processes and capacity in production.
By implementing the strategies, Amazon overcame its biggest problem of how to overpower
Wal-Mart. The major strategy which helps Amazon to reach this height is competitive
advantage and cost leadership strategy (Stankevičiūtė, Grunda and Bartkus, 2012).
Therefore, the investigation is a proof that how Amazon successfully revolutionized and
how it overcame its problem, which disrupted various industries making Amazon the leading
company.
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