BUS 481 Strategic Management

This Case Study Paper Worth 20% of your final grade

The purpose of this case study is to let you apply the concept of strategic management facing a specific company. The case provides you with experience of the strategic management problems that an actual organization, Amazon, faces. The case presents an account of what happen to Amazon over a number of years. It chronicles the events that Amazon has to deal with, such as changes in competitive environment, and how they respond to these challenges through corporate and business level strategies. The cash shows how functional-level strategies can help a company achieve superior efficiency, quality, innovation, and customer responsiveness, leading to competitive advantage.

After the reading the case below, write a nine to eleven pages paper on the following;

1. Provide a brief summary of the history of Amazon

2. Identify the functional-level strategies that Amazon has pursued to boost its: a. Efficiency b. Customer responsiveness c. Product quality 3. What does product quality mean for Amazon? And how has innovation helped Amazon improve its efficiency, customer responsiveness, and product quality

4. Provide some recommendations as to how Amazon can sustain it competitive advantage in the online retail business.

The final paper is due in class on or before Friday, December 3, 2021

Amazon.Com

When Jeff Bezos founded amazon.com in 1995, the online retailer focused just on selling books. Music and videos were soon added to the mix. Today, you can purchase a wide range of media and general merchandise products from Amazon, which is now the world's largest online retailer, with over $85 billion in annual sales. According to Bezos, Amazon success is based on three core factors: a relentless focus on delivering value to customers, operating efficiencies, and a willingness to innovate. Amazon offers customers a much wider selection of merchandise than they can find in a physical store, and does so at a low price. Online shopping and purchasing is made easy with the user-friendly interface, product recommendations, customer wish lists, and a one-click purchasing option for repeat customers. The percentage of traffic that Amazon gets from search engines such as Google has been falling for several years, whereas other online retailers are becoming more dependent on third-party search engines. This indicates that Amazon is increasingly becoming the starting point for online purchases. As a result, its active customer base is now approaching 250 million. To deliver products to customers quickly and accurately, Amazon has been investing heavily in a network of distribution centers. In the United States alone there are now over 40 such centers. Sophisticated software analyzes customer purchasing patterns and informs the company what to order, where to store it in the distribution network, what to charge for it, and when to mark it down. The goal is to reduce inventory - holding cost while always having product in stock. The increasingly dense network of distribution centers enables Amazon to reduce the time it takes to deliver products to consumers and to cut down on delivery costs. As Amazon grows it can support a denser distribution network, which it turn enables it to fulfill customer orders more rapidly and at a lower cost, thereby solidifying its competitive advantage over smaller rivals. To make its distribution centers even more efficient, Amazon is embracing automation. Until recently, most picking and packaging of products at Amazon distribution centers was done by hand, with employees walking as much as 20 miles per shift to pick merchandise off shelves and bring it to packing stations. Although walking 20 miles a day may be good for the physical health of employees, it represents much wasted time and hurts productivity. In 2012, Amazon purchased Kiva, a leading manufacturer of robots that service warehouses. Post the acquisition, Kiva announced that, for the next two to three years it would take no external orders and instead focus on automating Amazon's distribution centers. Kiva robots pick products from shelves and deliver them to packaging stations. This reduces the staff needed per distribution center by 30 to 40%, and boosts productivity accordingly. On the innovation front, Amazon has been a leader in pushing the digitalization of media. Its invention of the Kindle digital reader, and the ability of customers to use that reader either on a dedicated Kindle device or on a general - purpose device such as an iPad, turbocharged the digital distribution of books-- a market segment where Amazon is the clear leader. Digitalization of books is disrupting the established book - retailing industry and strengthening Amazons advantage in this segment. To store digital media, from books to films and music and to enable rapid customer download, Amazon has built huge server Farms. Its early investment in cloud based infrastructure has turn Amazon into a leader in this field it is now leveraging its expertise and infrastructure to build another business, Amazon Web Services (AWS), which will host websites, data, and associated software for other companies. In 2014, this new business generated over $2.5 billion in revenues making Amazon one of the early leaders in the emerging field of cloud computing. Jeff Bezos is on record as stating that he believes AWS will ultimately match Amazon online retail business in sales volume.