Operations Management Report: Amazon UK's Strategies and Analysis

This report provides a detailed analysis of the operations management strategies employed by Amazon UK. It begins with an introduction to operations management and its importance within the company, followed by an examination of Amazon UK's target market, operating processes, and performance objectives. The report explores the positive and negative impacts of various operational strategies, such as cross-functional, customer-driven, competitive priorities, and innovative strategies. It also includes recommendations for improving operational efficiency and effectiveness. The report covers key aspects like financing, operations, strategy, forecasting, and quality assurance within Amazon UK's operations department, emphasizing the importance of speed, quality, cost variations, flexibility, and dependability in achieving operational objectives. Finally, it concludes with a summary of the key findings and recommendations.

Operations Management Assessment
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Contents
Introduction and operations management..................................................................................3
Target market, operating process and performance objective...................................................6
The positive and negative impact of operational strategies.....................................................10
Recommendations....................................................................................................................12
Conclusion................................................................................................................................14
References................................................................................................................................15
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Introduction and operations management
Operational management can be defined as the management of business activity that is
directly related to the conversion of raw material into the final products of the company.
Another word that can be said that operational management is an area of management that is
concerned with designing and controlling the process of producing goods and services by a
business organization. Importance of operational management increases in a business
organization that is indulged in manufacturing organization as the primary business of the
social organization is dependent on efficiency and effectiveness of the manufacturing
process. This report will discuss various aspects of operational management and how a
business organization can bring effectiveness and efficiency in business operations. This
report will be prepared from the perspective of Amazon UK.
A brief overview of the company
Amazon is a multinational organization that was first established in the United States of
America and over a period of time, it has established its business all over the world.
Manufacturing and operational management in this report will be discussed with UK branch
of Amazon which is also called as Amazon UK. At the starting of the business operations, the
primary business of this organization was to provide an online platform for different
distributors and manufacturers to sell their product and services to customers. Customers can
check the description and price of product and services listed by manufacturers and
distributors and choose from a wide variety of product and services in accordance with their
needs and requirements (Ritala, Golnam and Wegmann, 2014). Over a period of time, this
organization has also started manufacturing of their own product and services that are sold in
a similar manner as other distributors are selling their products on Amazon UK. Therefore it
can be said that this report will be focused on manufacturing department of Amazon UK.
Operation management department in Amazon
Following are the primary functions that are performed by the operations department in
Amazon UK-
Financing- Operations management department is very essential for identifying the needs of
financing and satisfying such needs with low-cost sources of finance. This is one of the most
essential parts of the operations department as, without proper financing, day to day
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operations of the company cannot be achieved. In addition to that financing, a function of this
department also included ensuring that financial resources are utilized to their full potential
and there is no wastage of finances on unproductive business operations.
Operations
Operations department is also responsible for organizing directing and controlling all the
activities that are related to the conversion of raw material into final products. The primary
business of this organization is to provide a platform for other manufacturers to sell their
product to the customer but over a period of time, it has also developed its own production
line. Therefore the operations management department is responsible to make sure that the
quality of the product produced by their own product line is effective and in accordance with
the demand of customers (Reid and Sanders, 2015). Operations management department is
also responsible to make sure that the quality of products manufactured by other
organizations that are assured by the Amazon is in accordance with quality and specifications
listed on the website.
Strategy
Operations management department is also responsible for preparing strategies for
developing an effective and efficient structure for manufacturing processes. Strategies for
marketing and advertisement are also developed by operations management department as
they are aware of the specifications of the project and needs and requirements of the
customer. Advertisement and marketing campaign would be more effective if they specify
the specifications that are demanded by customers.
Forecasting
The primary responsibility of forecasting demand of a particular product or service
manufactured by the organization lies with operations management department. This is due to
the fact that they are aware of the quantity sold in relation to a particular project in the past
(Stevenson and Sum, 2014).
Quality assurance
One of the primary reasons that product and services manufactured by Amazon UK are very
popular is their quality as compared to other competitors in the market. Therefore it is very
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important for management to make sure that the quality of product and services are
maintained over the period of time so that customer loyalty can be achieved.
After evaluating different activities undertaken by the operations management department it
can be said that the importance of this department is very high for overall business
productivity and profitability (Slack and Brandon-Jones, 2018). Therefore it can be said that
the management of the companies should provide sufficient financial as well as human
resources to this department.
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Target market, operating process and performance objective
Target market
First of all, it is very important to discuss the target market for a particular business
organization as a type of product and services to be manufactured are decided on the basis of
the target market. Primary business operation of this organization is to provide a platform for
selling different type of product and services are manufactured by themselves and other
manufacturers. Therefore it can be said that there is no specific target market of this
organization. There is a wide variety of the product and services available for sale on the
selling platform of Amazon UK (Schultz and Block, 2015). Any kind of imaginable product
can be purchased by customers on this selling platform; therefore the target market is not
specific.
If a particular category is to be defined then it can be said that all the customers of this
organization are internet users. Any person that has access to the internet and has knowledge
about online shopping can be considered as a target customer for Amazon UK. It is important
for the business organization to direct its sales in advertisement activities towards this type of
customer. Management of the company should use modern advertisement techniques such as
a social media advertising and email marketing, article marketing, search engine marketing,
etc. all of these marketing techniques are directed towards the user that is using internet on
regular basis.
Operating objectives
It can be said that Amazon UK is providing product and services both to its customers,
therefore following are the five operating objectives of Amazon UK-
The objective of speed
First of all, it is very important to that product and services are delivered to customers as
quickly as possible as speed has become one of the most unique selling points for different
online shopping organizations. Amazon is one of the fastest delivery providers in the online
shopping industry (Heng, Gao, Jiang and Chen, 2018). One of the primary objectives of this
organization should do to maintain the speed of providing product and services to the
customer. The objective of speed should also be followed in the production process. It is
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important that speed is in the process of researching a new project, developing it and
introducing search product in the market.
Quality of product
As it is already discussed that one of the primary reason for the success and growth of
Amazon is the quality of its product. Quality assurance practices of the organization are not
limited to the products manufactured by them as they ensure that the quality of products
produced by other manufacturers that are selling their products on the Amazon website is
effective and efficient. While evaluating the quality of products management of the company
is required to consider the following factors-
Whether the product is reliable
Whether the product is durable
Whether the product can be easily serviced by the manufacturer
Availability and quality of after-sale services (Mahadevan, 2015)
Whether you search product is able to perform functions for which it is developed
Variations in cost
According to the concept of Economics of scale, it is important that the unit cost of a product
is decreased over the period of time. Primary principle behind this concept is that resources
employed in the manufacturing process will get used to the manufacturing process over the
period of time and time taken in every subsequent production of a similar product will
decrease. According to this principle variation in cost should be declining over the period of
time for a single product.
Flexibility in operations
The current business environment is very flexible and there are a number of competitors in
the online shopping market, therefore it is very important for an organization to have
flexibility in business operations. Operations management department of the company should
be able to adapt quickly in accordance with the needs and requirements of a customer
otherwise there is a possibility that customers will move to another organization for their
business (Heizer, Render and Munson, 2016). Amazon UK should be able to produce a
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different type of product and services at different quantity in accordance with the behaviour
of the business external environment.
Dependability on operational performance
This objective of the company helps in determining the relationship between the timely
delivery of products to the customer and the cost of production. There should be an
appropriate balance between timely delivery of products and cost of production. Cost of
production should not go very high if there is a minute delay in the product to the customer.
Operations strategy
As Amazon UK is dealing with a wide variety of the product and services, an operational
strategy used by the company is not limited to one strategy. Some of the most commonly
used operation strategy by Amazon UK is as follows-
Cross-functional strategy
According to the strategic management of the company has effectively integrated different
type of functions undertaken by the organization. There are a wide variety of functions
undertaken by an organization such as accounting, designing production process,
advertisement, and marketing, quality assurance, etc. It is very important for an organization
to make sure that all of these activities are properly today so that our efficiency and
profitability can be maintained (Kato et.al, 2015). For example, effective integration between
operations department and accounting department will result in accurate and relevant
transaction recording which will be helpful in making the important decisions in relation to
the future.
Customer-driven strategy
The customer-driven strategy is used by the business organization for providing additional
services such as product delivery, insurance, warranty, after sale services, etc. for
development of the strategic management of the organization has developed a flexible
strategy that helps in changing operations in accordance with needs and requirements of the
customer. Analysis of market trends and conducting market research in relation to customers
is an essential part of developing this strategy.
Competitive priorities strategy
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As it is already discussed that there are various organizations in the market that are providing
platform manufacturers to sell their product and services to the customer, therefore it can be
said that level of competition in this market is very high. Competitive priorities strategy helps
in analysing the strategies of competitors and amending Amazon's strategies accordingly
(Ivanov, Tsipoulanidis and Schönberger, 2017). This type of a competitive priority strategy
helps in gaining competitive advantage in the industry which will lead to increased market
share.
Innovative strategy
Management of the companies also focuses on providing innovative and unique products to
its customers. This type of strategy helps in gaining of attention of customer which will also
help other products and services provided by the organization. This type of strategy is
adopted by Amazon by providing unique services to its customers such as free and one day
delivery on becoming a prime member.
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The positive and negative impact of operational strategies
The previous section of the report has already discussed a different kind of operational
strategy used by the organization. Amazon UK is providing a variety of product and services
towards the customer and there is a possibility that a particular operational strategy which has
some positive impact might have some negative impact on certain objectives of the company.
The positive and negative impact of operations strategy will be discussed in this section of
the report.
Cross-functional strategy
This is a strategy that helps in integration of different business functions are performed by the
organization.
Positive impact- Positive impact of this strategy is on the operational objective of quality.
With the help of integration of different processes management of the company would be
able to run business operations in an effective manner (Thomé, Sousa and Scavarda do
Carmo, 2014). For example integration in accounting and the operations, the department will
help in the estimation of demand in future which will be helpful in the decision-making
process regarding business expansions. Therefore it can be said that the integration process
has a very positive impact on managerial accounting process.
Negative impact- Integration of different activities will definitely have a negative impact on
the objective of speed. Different kind of approvals will be required to be taken for
dispatching for starting the production of a particular product (Tsai and Hsu, 2014). This will
increase the time taken by management to make a product available to customers.
Customer-driven strategy
In this strategic decision in business, the organization is taken on the basis of needs and
requirements of the customer.
Positive impact- the operational strategy of flexibility will be easily achieved with the help of
this strategy as flexibility objectives required business operations to change in accordance
with the business environment (Chen, 2014). Needs and requirements of the customer and
changing business environment are directly related to each other as the change in customer
requirements is the factor that contributes to the dynamic environment.
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Negative impact- Objective of cost might be affected by this type of strategy as management
would be required to conduct regular market research and development activities. The
objective of cost states that the overall cost of production should be minimized so that
product can be provided to customers at a lower cost. Increased research and development
cost will definitely increase the overall cost of production which will lead to increased selling
prices (Weinstein, 2016).
Competitive priorities strategies
Competitive priorities strategy requires the business organization to change its business
operations in accordance with a change in strategies of a competitor.
Positive impact- There will be a direct and positive impact on cost objective with the help of
this strategy as management of the company would be able to provide product and services at
lower cost by comparing their cost with competitors (Glukhov and Balashova, 2015). This
will also lead to increased market share as customers will move from competitors to Amazon.
Negative impact- Following a competitive priority strategy will have a negative impact on the
flexibility of business operations. In this strategy business operations are not to following the
changes in the business environment as they are following the changes in strategies of the
computer (Lin and Tseng, 2016). This will lead to customer dissatisfaction as a company is
not manufacturing product and services in accordance with their needs.
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Recommendations
Following are some of the recommendations in which overall profitability and productivity of
Amazon UK can be improved.
Quality management- First of all it is very important to adopt the principles and practices of
quality management in the organization. Quality management will help in ensuring that
quality products are provided to customers at reasonable prices. This will help in the
achievement of Om objective of quality and variations in cost. With the help of quality
management to the overall cost of production will decrease as wastage of raw material will be
minimum while maintaining the effective and efficient quality of the product. this type of
strategy can be implemented by the organization by the adoption of quality management
systems such as ISO 9001 standard, total quality management, just in the time ordering
system, Lean manufacturing and supply strategy, etc. (Goetsch & Davis, 2014). For example,
there are various principles and procedures given in the ISO 9001 standard through which the
quality of a product and services can be maintained.
Human Resource Management
One of the most critical resources for any manufacturing business organization is its human
resources. Majority of business operations are undertaken by human resources in the
manufacturing process. In fact, the efficiency of machinery and advanced technology used by
the organization is also dependent on skill, knowledge, and efficiency of human resources.
Therefore it is important to make sure that human resources used in Amazon UK are
operating at their full potential. This can be done by Management by the introduction of a
reward system, motivation strategy, and effective leadership. The main focus of the
organization should be on the development of different kind of motivational strategies which
will help human resources to operate at their full potential (Bratton and Gold, 2017). The
motivational strategy should include developing a combination of monetary and non-
monetary reward system.
Effective communication
One of the primary reasons for failure in operation management is miscommunication
between different departments working in the organization. For example, if operations
management is not communicating effectively with the financing department then there is a
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