Information System Analysis of Amazon Australia (Trimester 2, 2018)

This report analyzes Amazon Australia's information system, focusing on its operations, value chain, and competitive strategy. It begins with an executive summary outlining key findings, followed by an introduction to Amazon and its customer-centric approach. The report then delves into various aspects of Amazon Australia, including its organizational structure according to Mintzberg's classification, and a detailed value chain analysis using Porter's model. It also explores the competitive forces shaping the online retail industry. The report examines the primary and supporting activities within Amazon's value chain, such as inbound and outbound logistics, operations, marketing, and technology development. It analyzes the bargaining power of suppliers and buyers, the threat of substitutes, and the competitive rivalry within the market. The report concludes by suggesting a new information system for Amazon Australia, aiming to improve customer experience and overall business performance. The analysis incorporates the Human Activity System (HAS) to provide insights on stakeholders and improve the information system.

Introduction to Information System
New Information System for Amazon
Australia
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Introduction to Information System
Executive Summary
Amazon.com is a leading retailer selling wide range of products online through the
various distribution system. It is founded in 1994 by Jeff Bezos. The company also
provides various services other than the e-commerce like cloud computing, AWS, and
sell products under their private labels.
They also have a centralised information system, which aligns every activity related to
the business operations of the company. It integrates with the supply chain and logistics
of the company, which help them in regulating the value chain effectively.
In this report, the views and issues of various stakeholders are described with the
recommendation of a new information system to provide better customer experience. In
addition, various views have been explored related to the Human Activity System
(HAS).

Introduction to Information System
1. Introduction
Amazon is one of the leading e-commerce industry, which is also known for its
innovation and disruptive technology. The company strategic goal of diversification and
expansion can easily be seen with the help of their continued growth and vision and
their customer-centric strategy is one of the critical success point, which makes them
the leader in this industry.
In addition, Amazon can use the help of the Human Activity System (HAS) which will
help them in gaining their vision and mission more effectively. This system is just
theoretical, not exists in reality, and expresses some purposeful purpose human activity
(Aggarwal & Ryoo, 2011). This means that they are intellectual constructs and are not
integrate with actual real-world activity. Indeed, the human interaction will have a
straight influence on the performance of the system when an individual move from a
natural system to human natural system.
Amazon information system plays an important role in the business operations of the
company, which help them in providing better services to the customers. However, with
the integration of Human Activity System in their information system, there will be the
rise in the competitive advantage, which will help them to gain more customers.
In this report, the overall analysis of the operation of Amazon will be done including its
value chain, competitive strategy, information system and these are will be analysed
with the help of several management approaches and models.
2. Part 1
2.1 Part 1- question a
An electronic e-commerce company, Amazon was founded in 1994 by Jeff Bezos. It was
started as a bookstore making a presence online but later diversified through selling
various other products like cd, DVDs, video games, furniture, jewellery and other
electronic items. With the time, Amazon is able to accomplish its mission with their
dynamic strategies and innovation. It also becomes second largest online selling retailer
in terms of sales and the largest by market capitalization (Davis & Khazanchi, 2008).
For every other country, Amazon has a different domain name so that the customer can
get their product easily and their home currency prices (Hu, Liu, & Sambamurthy,
2011). The success of Amazon strategy lies in their long-term goals with the integration
of strong values and cultures. Their approach of being customer-centric organization
also helps in expanding worldwide. In the segment of product selection, they always

Introduction to Information System
sustain leadership as by offering many products and services. One of the major
strategies of Amazon is its positioning which includes finding a Niche market and
targeting that category. They also take advantage of the approach of customer
personalization.
Considering Amazon operations, they are various key decision areas, which the
company make focus - Designing of goods and services, Management of superior
quality, process and capacity design, location strategy, layout design and strategy,
human resource and job design, supply chain management and scheduling (Arnott &
Pervan, 2008).
Other than the online retail business, with the help of innovation and disruptive
technology, Amazon is also a leading presence in AWS (Amazon Web Services) which is
used by many big companies like Netflix, and they are also investing in drones to make
deliver a product with them in future. In addition, they have also had self-made branded
products including Kindle, fire stick, OS, Echo devices with a personal assistant and
many more (Newcombe, Rath, Zhang, Munteanu, Brooker & Deardeuff, 2015).
This shows that innovation with disruptive technology is a part of Amazon strategy,
which also makes them one of the leading e-commerce in the world.
2.2 Part 1- question b
In the management approach of Mintzberg, it is stated that different structures of the
organizations arise from the different characteristics that shape them. A leader in the
industry always finds the best and effective way to integrate the main internal and
external elements and redesign them for the purpose of continuous improvement.
There are different structures of Mintzberg’s Organization types, which includes
professional organization, divisional organisations, innovative organizations, machine
organizations and entrepreneurial organisation (Lunenburg, 2012).
The organization form Amazon Australia is a divisional organisation. The main reason
behind this statement is that the nature of divisional organization includes different
business units and product line and they are all controlled by the central headquarters.
The main advantage of this structure is that it helps line managers to make more
control over the operations and business decisions, unlike the machine structure.
Amazon.com headquarters is located in Seattle, Washington and their various sub-
branched are spread in different countries of the globe having a unique structure and

Introduction to Information System
all make their own decisions according to the local market segment (Cappos,
Beschastnikh, Krishnamurthy & Anderson, 2009).
2.3 Part 1- question c
Value chain analysis helps an organization in evaluating its primary and secondary activities
that add value to their products (Soosay, Fearne & Dent, 2012). It also helps organization in
finding out the best way to reduce cost and climate waste and thus increase profitability
by gaining an advantage over the competition.
Primary Activities of Amazon Australia –
Inbound
Logistic
s
Operations Outbound
Logistics
Marketing
and Sales Service
Firms Infrastructures Human Resources Technology
Development Procurement
Primary Activities Secondary Activities

Introduction to Information System
 Inbound Logistics – In this primary activity of value chain, Amazon Australia
takes full responsibility for logistics, customer service and the return of product
in any case. The orders, which are fulfilled by Amazon (FBA), are linked with this
inbound logistics aspect of their value chain. For example, if a person orders a
piece of furniture from Melbourne, Australia and that product delivers by FBA
instead of FBM (Fulfilled by Merchants), the customer can able to get the choice
of one day or two day delivery with free shipping and other benefits (Kawa,
2017). This will increase the efficiency of the whole value chain; however, the
process also depends on various other factors.
 Operations – In Melbourne Australia, Amazon.com have successfully opened
their 24,000 square metre centre and this fulfilment centre will be situated in
Pellicanos M2 Industry Park. In addition, Amazon’s head office will be located in
Sydney headed by Rocco Braeuniger (taking the role of country manager). The
AWS segment of Amazon will help the company in making a global presence over
the sales of online servers and database, cloud computing and other services for
the several agencies, universities and start-ups. Business organization whether
on large or scale find it beneficial as AWS offers more than 516 services and
features (Newcombe, Rath, Zhang, Munteanu, Brooker & Deardeuff, 2015).
 Outbound Logistics – Amazon Australia had made various agreements with the
agents for the purpose of distribution of goods. They will also rely upon various
other business organization for the fast delivery of the products such as FedEx,
UPS and TNT (Chesbrough, 2011). The aim of Amazon Australia here is to pull
more amount of customers by making their company different from the
competitors in terms of service and not only in the price. The outbound logistics
of Amazon also includes, - Fulfilment centres, digital delivery and physical stores.
 Marketing and Sales – Various vendors in Australia are using Amazon Marketing
Services in Australia as this is helping them in boosting their sales through
performance-based advertising. Amazon Marketing Services enables vendors to
sell their products to the right buyers with highly personalised targeting (Cyr,
Hassanein, Head & Ivanov, 2007). Amazon also consists of various solutions for
the rise in awareness and increase of the conversion rate in the marketplace.
This includes Sponsored products, headline Search Ads and Product Display Ads.
 Services – For every organization, an exceptional customer service is the major
source of value creation and in the case of the Amazon, it can easily be seen with
their vision statement stating that they want to be the Earth most customer-
centric company. One can easily find how well the Amazon is in terms of
customer service is. However, In Australia, Amazon also offers coaching
programs to the sellers, which help them in getting alert about the opportunities

Introduction to Information System
for the competitive pricing and selling selections (Lawrence, Richards & Lyons,
2013).
Supporting Activities of Amazon Australia –
 Firms Infrastructure - This includes the central customer data warehouse
present in the Sydney, which consists of all the information and records of the
customer, vendors and suppliers of Australia. This infrastructure also uses the
help of AWS and other web services so that the real-time information can be
synchronised to all the divisions over the globe.
 Human Resource – The HR team partners of Amazon Australia always looking
for the HR resources who possess the traits of a leader. The company are also
using the services of temporary people and resources in spite of hiring fulltime
employees so that to better serve the targeted segment by saving a huge amount
of costs (Motahari-Nezhad, Stephenson, & Singhal, 2009).
 Technology Development – Amazon Australia is investing huge in the R and D
department so that to make themselves different from the competitors in terms
of strategy. The integration of Amazon Prime free delivery and Amazon Prime
video also comes in the supporting activity (Bamburry, 2015). The innovative
services of the company such as personalised recommendations and once click
ordering are also improving the technological aspect of the company supply
chain.
 Procurement – In Amazon Australia, their procurement professionals always add
value to their supply chain through the process of continuous improvement as
they procure non-inventory goods and services for their fulfilment centres (FCs).
They always keep an effective balance between the internal customers and
external suppliers.
2.4 Part 1- question d
With the help of Porter’s Competitive Force model, it can easily be analysed that what
are the various forces shaping the competition in the online retail industry and what is
the Amazon Australia position in this place. It is a very effective tool for analysing the
level of competition and helps the company in the formulation of strategy.
 Bargaining power of Amazon suppliers – Currently, the bargaining power of the
Amazon is low to medium as they are always in the sky when it comes to

Introduction to Information System
supplying chain. This means that most of the suppliers need to work according to
the rules set by Amazon and follow the respective standards of the supply chain
laid down by Amazon. However, a many-advanced country like Australia is
building their new payment platform that will transit to a real-time system
(Isckia, & Lescop, 2009). Therefore, this innovation has a capacity to build an
alternate infrastructure of payment system, which may affect Amazon Australia
in its operations.
 Bargaining power of Amazon buyers – The bargaining power of buyers is high,
as their various competitors present like Harvey Norman in Australia, which
causes worrying to the Amazon. Nowadays, every customer has sufficient
knowledge of the benefits and features of most of the products due to the rise in
the digital economy (Swink, & Song, 2007).
 The threat of substitute products – In this aspect, it is high. Many Australians also
prefer physical retailers instead of online. Although, Amazon provides excellent
customer service however, the custome r.
 The threat of new entrants – The threat of new entrants is low for Amazon. In
Australia, there is no presence of the various international online retailer like
Alibaba and eBay and rise in the digital technology and innovation leads to
various barriers to the entry of Australia e-commerce economy. Amazon is a big
brand who already invested $700m for the long-term success in Australia and
with its continuous improvement in the digital field, it will be hard for any other
company to enter into the Australian market with a competitive position.
 Rivalry in the Industry – The level of competition in the Australian market is
high which may also cause troubles for the Amazon to make their competitive
stand in the market as various competitors like Coles, Wools Worth and Harvey
Norman already build their strong presence in the market.
3. Answer to Part 2
3.1 Part 2- question a
One of the most elementary issues faced by the e-commerce online business industry is
the inadequate stock. This situation occurs many times when the customer is trying to
purchase online and the site shows that “item is not available” (Godana, & Ngugi,
2014). This affects the brand value and goodwill of the company and Thus they have to
maintain a sustainable level of stock and also made their site accurate so that it does
not show those products which are currently out of stock or not in the hand of supplier.

Introduction to Information System
In the Business to Consumer Electronic Commerce, the primary stakeholders are the
retailers and consumers who sell the products whereas the executives are the
secondary stakeholders who manage the entire process from getting raw materials to
its delivery. Here, many customers faced the problem of insufficient stock, as the
retailers are not able to manage their stocks on time.
In Australia, for the purpose of branding, Marketing Department is the other
stakeholder in which sales department is involved in controlling of various
arrangements in sales. In addition, the ERP system of the company is integrated with
the e-commerce system by IT personnel department as it is connected with stock
management in the Amazon Australia.
This made Amazon and it all departments to face negative reviews of the customers and
this show the inefficiency in the management of Amazon which destroying its goodwill
and shifting of the customers to the rivals.
3.2 Part 2- question b
Manufacturers A
Manufacturers A
Manufacturers A Contractors
Build Plan
Call-Offs
Site Specific Stock levels/
extras/
supplier
performance

Introduction to Information System
Do the job!
Pickup/move
Schedule requirements
3.3 Part 2- question c
Lane
Black box (Pool)
Message Flow
Purchase Order Sequence Flow Request of Changing PO Invoice
End Event
Customer
Manufacturers AManufacturers
A
Merchants A
Manufacturers A
Manufacturers A
Manufacturers B
Merchants CManufacturers C
STOCK YARD
X houses worth of goods Site Manager
Labour / Plant
Progress Chase

Introduction to Information System
Message Start Event Task Gateway
Online Shop
3.4 Part 2- question d
(Source: Petter, DeLone, & McLean, 2008)
Suggest Change
Check Stock
Level
Pack Goods Ship
Goods
NO
Sufficient
Stock
Yes
Order
Complete
Order
Received

Introduction to Information System
In 1992, This model is developed by William H. DeLone and Ephraim R. McLean. In this
model, information system is analysed and evaluated from six dimensions. These all
dimension gives a broad view of the IS success and are proposed to be interrelated
rather than independent.
This information system model can be integrated with the issue in Human Activity
System so that to evaluate the problem of insufficient inventory in Amazon, Australia.
In this IS model, the information quality can be defined as the quality of the information
that can be captured by the system and so able to store and deliver (Gent, Danabasoglu,
Donner, Holland, Hunke, Jayne & Worley, 2011). In this model, the algorithms are such
strong that they can provide benefit to the users and the organization effectively.
In this procedure, the inability of the system to deliver and store accurate information
for the readiness of stock causes a problem of inaccurate and insufficient inventory.
Therefore, it affects the customer satisfaction as the customer is not be provided with
stock as per their requirement and also the system here cannot make benefit for the
organization. In addition, this is one of the areas where human activity system is not
successful.
The next dimension is the System use/ Usage Intensions where information, quality of
services and systems influence the use and usage intention. For impacting usage
intentions, the system use is targeted to impact the customer satisfaction and in last
this directly affects the net benefits which are provided by the system.
Here the issue of insufficient and inaccurate inventory is related to the integrated use
and usage of systems. The procurement or resource demand department does not
update the requirement of stock and this affects the customer satisfaction by making
the benefits hidden for the users.
The next important dimension is the system quality, which can impact, IS on a great
extent. This dimension can able to produce advantage or benefits with the help of
mediational relationships in relation to the customer satisfaction and usage intentions
(Jan, & Contreras, 2011). Here the issue of inadequate inaccurate stock influences the
user satisfaction because it defines that system quality was not equal to the customer
expectations.
The quality of service is also a critical point in this Information System and it is
evaluated based on the quality of service they will be able to produce. Here, the
information system is not able to deliver the quality service to the consumers of Amazon
Australia.
In the perspectives or approach of Net System Benefits, they focus on the capability to
produce with the help of information systems so that overall value can be determined