Category: Amazon

Company’s Objective: The Company aspires to be ‘earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.

Company’s Strengths and Weaknesses

Strengths

Well Known Global Brand

Amazon is a well-known brand in online retailing. The reach of the internet knows no boundaries, therefore amazon.com diversified in a range of products, which further helped in strengthening its image internationally. A strong brand image helps in taking on the competition and also provides a competitive edge to the company in the online retail industry and helps in attracting more dedicated as well as curious customer traffic.

Amazon’s ranking amongst the top 100 global brands ranking has consistently improved over the years from 68 in 2005 to 65 in 2006 and 62 in the year 2007. The company registered similar improvements in its brand value from $4,248 million in 2005 to $4,707 million in 2006 and subsequently to $5,411 in 2007. Amazon has put a lot of effort into the personalization of the online shopping experience. The online search-find-obtain experience is one such innovation from Amazon.com. To further strengthen the brand value, the company has started exploring overseas markets as well. It has a good localized presence in Canada, France, Germany, China, Japan, and the UK.

Tie-up with other Reputed Brands

Amazon has entered into partnership agreements with other reputed brands like Canon, Nikon, Sony, Panasonic, Blackberry, Casio, Fuji, HP, Olympus, etc. which not only makes it a reliable online marketplace but establishes it as a company offering quality at reasonable prices.

Unique Business Model

The online retailer operates on a unique business model which enables buyers and sellers to interact over safe technology platforms. Such interaction helps in saving transaction costs as no intermediaries are present. Such an arrangement works quite perfectly for products that are otherwise very difficult to find in the marketplace e.g. vintage products, end-of-life products, etc.

Focus on R&D

Amazon has a dedicated team of professionals, and a good amount earmarked for research and development activities. During 2006, the company invested about $662 million in R&D with a consistent increase in the amount over the years. This helps the company in maintaining its leadership position in the market.

Weaknesses

• Declining profit margins: The operating profit margins of the company saw a declining trend over the last couple of years. Though there are some indications of improvement in the year 2007, the situation remains grim in view of increasing competition and cost pressure.
• Weak performance in some promising markets: Though Amazon.com diversified in a couple of markets outside the US by entering into strategic tie-ups and acquisitions, the picture is not that rosy as it was visualized. For example, Company entered the Chinese market by acquiring Joyo.com in 2004, but the competition became more prominent from another domestic player dangdang.com in China. China, having a huge customer base, is stated to be a market full of promises, and China Internet Network Information Center (CNNIC) also states that online shopping in the country is expected to grow by 190% in the coming year. But, Joyo.com has a weak market share of 12% against 18% of dangdang.com (Datamonitor, 2007).
• Declining cash flows: Amazon.com has seen a decrease in cash flows over the years. Cash from operations declined from $733 million in 2005 to $702 million in 2006, but it is heartening for the company that the Free Cash Flow figure became more than double for 2007. The settlement and litigation proceedings pressure was also a reason for the decline in cash flows.

Opportunities and Threats for Amazon.com

Opportunities

• Chinese Market: China has now opened up its economy and it promises to be a market with vast potential on account of more than 1.3 billion consumers. Since Amazon.com has already established itself as a reputed brand in the Chinese market, therefore, it stands to gain from the experience of these 2-3 years and create a niche for itself in the market.
• Growing emphasis on E-commerce: All around the globe, there’s a growing curiosity and emphasis on e-business and related technologies. This augurs well for the company, as its core competency is in the field of e-business and online retailing only.
• A number of Acquisitions and Partners: Over the years, Amazon.com has been able to strike strategic deals with a number of reputed partners and online ventures in different markets, which promises to provide the company enough opportunities in respective markets. In the recent past, the company acquired dpreview.com, the web’s most comprehensive site for digital camera information and reviews. In May 2007, the company acquired Brilliance audio, the largest independent publisher of audiobooks in the US.
• Digital Music Store free of copy-protection technology: Company’s new venture providing free MP3s and a range of other music formats, promises to bring in a revolution in the market. This will help Amazon.com in offering millions of songs, free of copy protection technology, which allows them to be played on any personal device. The company has obtained the license to the digital catalog of EMI, a music company. Until now, Digital Rights Management (DRM) prevents buyers from making multiple copies of the music. Therefore, the company’s sales are bound to increase when it provides DRM-free music to patrons.

Threats

• Increasing Competition: The level of competition is increasing from the existing retailers like Wal-Mart, Tesco, etc. Such retailers have the added advantage that they have a strong physical presence. In addition, such retailers are now firming up their online presence as well, by entering into strategic partnerships with some companies. This promises to pose a good competition for Amazon.
• Dependence on vendors: Amazon takes its supplies from a number of vendors, with whom the company enters into agreements from time to time. In the absence of any long-term agreements, these vendors hold the key to the profitability margins of Amazon.com. In case such vendors are attracted by rival companies, things might become difficult for Amazon.
• Legal Wrangling: Amazon.com has been contesting a number of legal cases of patent infringement. Such court battles not only take a huge sum of money but also invite some adverse publicity for the company as well. In the recent past, IBM also filed two patent violation cases against Amazon.

Stakeholder Analysis

For any organization to work, a number of stakeholders have to pool their efforts. The key stakeholders for Amazon.com include the employees, the customers, the financial institutions, the media management team, the shareholders, and of course the general public.

Current Problems

The major problems being faced by the company include;

• The host of legal proceedings.
• Pressure on profitability margins.
• The increasing dominance of the rival companies in some markets.
• Regularly updating the levels of security for online transactions.
• Making the logistics appear more cost effective.

Recommendations

It is no secret that today we are living in an era where customer convenience is of utmost importance. If a company is able to provide quality products to the customers at reasonable prices and at the doorsteps of the customers, then the company will be able to have a long-lasting relationship with customers. The company can acquire a competitive advantage over its rivals on account of marketing efforts, brand building, value creation, innovation, operational efficiencies, etc. But more important is to sustain the advantage.

Therefore it is very important that Amazon keeps investing in value configuration i.e. keep thinking about newer methods on how value is created for its customers, how the most important business processes function to create value for customers. Some of the value addition gradually takes the form of threshold competencies for the organization, and the consumer starts expecting these value additions from the company. The process of value creation encompasses managing quality in the entire chain of processes leading to the production of the final product or service.

Introduction

The significance of creating a merger has grown exponentially with the rise in the globalization movement. Facing a range of major threats in the global economy, companies require the support of partner organizations to increase the extent of their competitiveness and minimize risks associated with economic and financial challenges. For this purpose, the use of a merger should be deemed as a viable solution.

In this paper, the phenomenon of a merger as an economic concept will be scrutinized. Specifically, the concept of a merger will be defined, followed by an example of a successful merger performed in the global economy recently. Afterward, drawing from the example mentioned above, as well as exploring the concept of a merger using scholarly sources, key factors that make a merger successful will be identified. Finally, a hypothetical merger between two well-established organizations operating in the global market will be considered as a possibility, supported by detailed arguments that prove the reasonability of the described hypothetical merger.

Successful Merger

As a phenomenon, a merger is far from being an innovative solution, yet the rules for performing it successfully have not been crystallized into a final set of guidelines yet. According to Chathuranga (2015), a merger is a “combination of two or more firms in which the liabilities and the assets of the selling companies are mainly absorbed by the buying company” (p. 7). However, the phenomenon of a merger has recently been expanded into the concept of the companies involved in a merger sharing their controlling powers more charitably. Overall, the notion of a merger seems to have become significantly looser with time due to the shift in power dynamics between organizations and the need to explore innovative approaches toward managing transactions within a merger (Zhang et al., 2015). The observed trend can be described as fairly positive since it opens new opportunities for challenging the status quo in the global market and implement innovative managerial solutions.

When seeking the examples of a successfully performed merger, one may bring up the case of Vodafone and Mannesmann (Al Suliman, 2015). Due to the high economic potential that both organizations had at the time, coupled with the compatibility of their risk management approaches and available resources, the merger turned out to be a stupendous triumph for both parties involved. By the time when the merger took place, Vodafone had gained the attention of a vast number of people, attracting highly diverse buyers (Al Suliman, 2015). Pioneering in telecommunications with its cutting-edge technology, Vodafone has managed to build quite a reputation for itself (Al Suliman, 2015). Mannesmann, in turn, had built a reputation as a tube manufacturer before the merger (Al Suliman, 2015). Therefore, both companies had enough resources to offer each other in the process of merging.

Factors Contributing to Success of Merger

In hindsight, the evidence supporting the success of the merger was present from the very beginning, with each of the organizations having a plethora of resources to share and provide to its partner. Indeed, the collaboration of Vodafone and Mannesmann is a perfect example of a successful merger, given the circumstances under which the agreement took place. For example, diversification of companies’ portfolios can be considered an important factor since it provides more opportunities for firms to collaborate and join their efforts in producing a homogenous service (Friedman, Carmeli, Tishler, & Shimizu, 2016).

In addition, having a projection which both organizations can work in order to rebrand themselves and gain the following of a larger audience can also be considered an important contributing factor. As the example of Vodafone and Mannesmann has shown, creating a brand product allows companies to cement their new image in the global market and focus on targeting new audiences, expanding the range of their influence, and seeking out new opportunities.

The necessity to expand into a larger market, preferably the global economy, should also be perceived as an important contributing factor that defines the success of a merger, in the case of Vodafone and Mannesmann, the formerly required representation in the German economy setting, which the latter could provide (Al Suliman, 2015). Thus, the described three factors typically represent the conditions under which a merger is likely to produce the desired effect.

Hypothesized Merger

Although the idea of a merger might seem rather accessible and sensible for any organization that enters a global economic environment, it is also fraught with multiple challenges. Thus, using a merger as the means of advancing any company in a particular market would be a mistake. However, some companies could consider merging in order to gain more influence. For example, a merger between Amazon and Netflix is a feasible merger given the recent need for the latter to gain influence among a wider range of customers. Since both cater to predominantly American audiences yet attempts to appeal to different cultures, the merger is likely to lead to an improvement in the companies’ performance. In addition, the merger will help to resolve the financial issues that both companies currently experience, with Netflix lacking new buyers and Amazon being in need of an improved e-commerce framework (Angwin, Mellahi, Gomes, & Peter, 2016). Given that both companies operate in the digital market, the merger will be performed seamlessly and allow both Amazon and Netflix to integrate changes into their framework immediately.

References

Al Suliman, M. H. (2015). In mergers and acquisitions-IT: Results of the absence of CIO in ex-ante planning and the absence of key IT staff in ex-post integration. Journal of Management Information Systems & E-Commerce, 2(2), 1-10. Web.

Angwin, D. N., Mellahi, K., Gomes, E., & Peter, E. (2016). How communication approaches impact mergers and acquisitions outcomes. The International Journal of Human Resource Management, 27(20), 2370-2397. Web.

Chathuranga, D. (2015). Analysis of the impacts of Merger and Acquisition on business development in Telecommunication industry in India: Case study of Vodafone & Hutch (Acquisition) and Indus & Bharti Airtel (Merger). Munchen, Germany: GRIN Verlag.

Friedman, Y., Carmeli, A., Tishler, A., & Shimizu, K. (2016). Untangling micro-behavioral sources of failure in mergers and acquisitions: a theoretical integration and extension. The International Journal of Human Resource Management, 27(20), 2339-2369. Web.

Zhang, J., Ahammad, M. F., Tarba, S., Cooper, C. L., Glaister, K. W., & Wang, J. (2015). The effect of leadership style on talent retention during merger and acquisition integration: Evidence from China. The International Journal of Human Resource Management, 26(7), 1021-1050. Web.

The Significance of Web Representation

In the 21st century, the company’s website became its face in many ways. Potential clients, vendors, and partners now can find the organization on the Internet and make judgments about its characteristics using the presented information. Consequently, created web image not only impacts consumers’ opinions and their experience with the product or services but also profoundly influences the company’s reputation and ultimately, its success in business.

Web resources are also useful in the process of searching for a prospective employer. In the past few decades, human resource (HR) procedures moved toward new technologies creating a range of innovative HR activities (Bratton & Gold, 2017). However, the data regarding the compensation system displayed on the HR page is often scarce or absent. This issue could be seen on many websites, and it creates obstacles for the employee in the process of evaluating the position information, despite the idea of the company’s interest involved.

Human Resources Pages Analysis

For the assignment analysis two companies have been chosen: Tesla and Amazon. Both websites provide a job search option for the candidates’ convenience, but the Amazon’s search is much more extensive. Amazon’s page also suggests a few subsections, such as Student Programs and Remote Career opportunities (“Find careers,” 2018), which expands the applicant’s ability to find the desired position. Besides, there is a possibility to check the status of the application. A person can easily browse job categories on Amazon’s HR page.

The Careers page of the Tesla website does not contain the information about the compensation range of any role (“Careers,” 2018). It could not be found in the detailed descriptions of positions as well. Concerning possible employees’ benefits, the company denotes only its willingness to provide “reasonable accommodations to individuals with disabilities” (“Careers,” 2018, para. 9). The page has the contacts for those who might need such services. The Amazon’s Find Careers page also does not display the information regarding salaries. The individual position descriptions are very detailed but do not contain the wage ranges either.

Following the prevailing trend, both companies present their online image as regardful and caring employers. The research suggests that this strategy might be effective in attracting new employees. According to Jones, Willness, and Madey (2013), corporate social performance influences the level of the company’s attractiveness for the candidates. The statement regarding equality displayed on Tesla’s Careers page also brings a certain value: it has been proved that the older applicants are sensitive to the information containing age-related bias (Lyons, Wessel, Tai, & Ryan, 2014). The absence of such information could lead to the employee’s choice not to pursue the role if he or she feels vulnerable. The Amazon’s Find Careers page provides a whole subsection about Amazon culture and an article about the benefits for full-time employees.

Implications for Improvement

There are a few ways to improve the content for both companies. Careers page on Tesla’s website and Find Careers page on Amazon’s website could display at least an approximate wage range in the description of a chosen position. Also, some information about the response time to the sent application could be useful. According to Alnıaçıka, Alnıaçıka, Eratb, and Akçin (2014), the differences exist in the way the candidates from different cultures perceive the employers. Therefore, addressing this issue might positively impact employees’ decisions.

Overall, both websites appear to be relatively helpful in providing the applicants with the necessary information. However, the data regarding these employees compensation strategy are unavailable. Such an omission could prevent the employees from using the HR content to his or her benefit. Many people do not see the connection between employee’s gain and the organization success, including some of the HR managers themselves, but a failure on the individual level could not create a solid foundation for collective prosperity.

References

Alnıaçıka, E., Alnıaçıka, U., Eratb, S., & Akçin, K. (2014). Attracting talented employees to the company: Do we need different employer branding strategies in different cultures? Procedia – Social and Behavioral Sciences, 150, 336-344. Web.

Bratton, J., & Gold, J. (2017). Human resource management: Theory and practice (6th ed.). London, UK: Palgrave.

Careers.(2018). Web.

Find careers. (2018). Web.

Jones, D. A., Willness, C. R., & Madey, S. (2013). Why are job seekers attracted by corporate social performance? Experimental and field tests of three signal-based mechanisms. Academy of Management Journal, 57(2), 383-404. Web.

Lyons, B. J., Wessel, J. L., Tai, Y. C., & Ryan, A. M. (2014). Strategies of job seekers related to age-related stereotypes. Journal of Managerial Psychology, 29(8), 1009-1027. Web.

Introduction

• A brief history of Amazon.com

Goals and objectives of Amazon.com:

• The main goal of Amazon.com is to become one of the most secure and customer-friendly places on the internet, where customers can find and buy different items.

Objectives for the next five years:

• Amazon.com hopes to expand to other countries around the world, creating websites that are customized to meet the needs of those audiences.

Objectives for the next year:

• Amazon.com aims at introducing free delivery of its products to customers.
• Expansion plan that will see the introduction of new categories for products on the website
• The company also hopes to restructure its customer experience path by implementing cost-efficient structures that will see customers spend prudently

Preliminary investigation:

• Among the challenges or problems that Amazon.com experiences include security issues, lack of trust among some customers, and costs associated with the delivery of products to remote areas.

Detailed investigations and recommendations:

• The current systems at Amazon.com are highly functional, helping the company to meet most of its objectives

Amazon.com began as an online bookstore but gradually evolved into the biggest online retailer. The company sells a wide range of products around the world. It has also grown and expanded into various websites targeting different specific markets such as France, Italy, India, and the UK among others.

Goals and Objectives of Amazon.com

The main goal of Amazon.com is to become one of the most secure and customer-friendly places on the internet, where customers can find and buy different items. The company hopes to attain higher levels of customer trust and loyalty.

Objectives for the Next Five Years

Amazon.com hopes to expand to other countries around the world, creating websites that are customized to meet the needs of those audiences. For instance, the company hopes to introduce an all-inclusive website in India offering a wide collection of services and products for the local people. The website will offer products such as books and music.

Objectives for the Next One Year

Amazon.com aims at introducing free delivery of its products to customers. The company aims at expanding its Amazon Prime program for free delivery to its loyal customers around the world. Secondly, the company is working on a short-term expansion plan that will see the introduction of new categories for products on the website.

The company also hopes to restructure its customer experience path by implementing cost-efficient structures that will see customers spend prudently. This will see an active customer relations team that will be ready to respond to customer-related issues.

Preliminary Investigation

Among the challenges or problems that Amazon.com experiences include security issues, lack of trust among some customers, and costs associated with the delivery of products to remote areas. Therefore, this project aims at investigating how the company is set to restructure or organize itself in terms of its responsiveness to these issues.

Therefore, the scope of engagement is limited to the challenges the company faces, its goals, and the processes put in place to mitigate the problems. However, there are some constraints that may limit the level of engagement with the company during this investigation. For example, amazon.com has many subsidiary websites in different countries, each of which faces a different challenge. Consequently, it may be difficult to harmonize all the issues and relate them to the organization as a whole.

Nevertheless, the project will proceed through a detailed data gathering process that will seek to analyze most of the relevant data available in relation to the company and the scope of this study. For instance, information such as company reports and letters to shareholders will be of great significance.

Detailed Investigation

The current systems at Amazon.com are functional, helping the company to meet most of its objectives. However, there is still a lot of room available for improvement in the future to make the system more responsive to changing preferences of customers.

There are also several feasible alternatives for the company. In terms of technical alternatives, the company can outsource some of the technical issues to third-party organizations. With regard to operations, the company should hire qualified people to help manage its systems. Economically, the company should restructure itself to respond to changing economic patterns globally.

Some of the recommendations for Amazon.com include expensing its Amazon Prime program, lowering the costs of its products, increasing its product range, and outsourcing some of its technical functions.

In every organization, pricing strategies influence the coverall performance of the company and its market position. Dynamic price is attracted more attention than any other marketing tool. In the modern economy, non-price factors determine increasing marketing importance and products are differentiated on other bases than price. Dynamic price is typical for e-commerce as it allows companies to respond to changes and market fluctuations. “The forces of supply and demand are leading variables that dictate pricing. They cause some e-tailers to continually analyze supply and demand information and adjust prices accordingly” (Dynamic Pricing 2009). Amazon.com is a leading book retailer, operatives on a global scale. Amazon.com is a market leader focused on printed products and consumer products. Its brand image and unique pricing strategies appeal to diverse customer groups. Yet successful performance requires bridging the gap between expectations and demands of customers. It could even be said that successful marketing is the bridging of this gap (Baker 2006).

At Amazon.com, no single pricing program is suitable, since the complexity of dynamic pricing situations varies by product, cost, demand, and industry structure, and prices must relate to objectives, information, knowledge of alternative policies, and strategies and adjustments. At Amazon.com, the top managers are faced with the problem of establishing the best price under assumed cost-and-demand conditions. The dynamics of the e-market and the problems of measuring both costs and demand make it a difficult task. Dynamic price estimates are made of what Amazon.com’s management expects demand, cost, and competition to be under various conditions. Then management team develops pricing programs that affect survival, profits, growth, volume, market share, R & D, and image. A distinction is made between coffee price determination and price administration. The activities and focus of each are different. Dynamic price determination refers to the processes and activities employed to arrive at a price for a product (Nagle and Hogan 2005).

The benefits of dynamic pricing are fast response to coming changes, ability to compete with other companies and the possibility to attract new customers. At Amazon.com, the management team tends to rely more on an average cost approach to pricing than on a marginal approach. In real business satiations, this reliance on average coffee costs can lead to a decision that can actually reduce sales, increase costs, and reduce profits (Monroe, 2001). Though, some executives advocate that sunk costs (costs that cannot be revoked and that are not part of the current pricing decision) should be ignored. At Amazon.com, dynamic pricing strategies are not affected by current decisions — nothing can be done about them. The drawbacks of dynamic pricing include a need to monitor and evaluate market changes and predict possible fluctuations on long-term and short-term basis. This seems to make sense, because the concept introduces the notion of economies of scale and the impact of ability on costs, indicating that product volume beyond a certain point may increase costs. In formulating a marketing strategy for coffee beans, Amazon.com has dealt with only the broader relationships of pricing to selected elements in the marketing. Dynamic price decisions in specific situations require both experience and practical knowledge. Price theory alone will not suffice. In fact, where pricing is of critical concern, pricing specialists become necessary (Marn et al 2004).

In sum, dynamic pricing strategies of Amazon.com suggest that among the present and future external issues that influence pricing policy are the number and concentration of competitors, the degree of competition, profitability, ease of entry, product heterogeneity, size, legal aspects, channels of distribution, the elasticity of demand, total industry demand, kind and size of buyers, and spatial forces. Usually, these are handled through consideration of the anticipated cost-revenue approach.

References

Baker, R. J. (2006). Pricing on Purpose: Creating and Capturing Value. Wiley.

Marn, M et al (2004), The Price Advantage. Wiley; 1 edition.

Monroe, K. B. (2001), Pricing: Making Profitable Decisions. New York: McGraw-Hill.

Nagle, Th. T. Hogan, J. (2005). Strategy and Tactics of Pricing: A Guide to Growing More Profitably. Prentice Hall; 4 edition.

Pricing – Dynamic Pricing. (2009). Web.

Introduction

Every business’s main aim is making profits. Indeed, competing business ventures may attain this goal despite following different business models. Nowhere is this concept better illustrated than by three bookselling companies namely, Barnes &Nobles, Border and Amazon. The three bookstores are all competing for the same market share of book readers, except that Amazon has diversified to other consumer products, but still keeps books as one of its major products.

Amazon has always boasted of being the number one book store. However, this claim was shadowed by the financial strains that the company faced in the early 2000s. Lately, though, the company is back on its footing and has devised ways to keep it afloat amidst the growing competition. One such way is by working with publishers to create a search-inside-the-book function, which allows customers to have a peek of what the book contains before finally deciding whether to buy it (Knowledge@Wharton, 2006). Amazon has book reviews posted on its website along with corresponding books. This makes it even easier for the customer to decide if the book suits their reading preferences or not. Additional features that develop customer loyalty in Amazon are the shopping suggestions offered to customers and the one-click purchasing. Overall, Amazon has succeeded in creating an easy and pleasant online shopping experience for customers (Knowledge@Wharton, 2000). This not only draws new customers but also builds brand loyalty. Amazon, just like the other bookstores spends a huge budget on marketing and advertising strategies in an effort to draw more clients to its customer base.

Borders bookstores on the other hand have a business approach that focuses on customer satisfaction. As such, the book stocks on the store shelves are mainly determined by demand. Before 2000, Borders had a sophisticated program that traced reader behaviour and was thus able to predict demand. This enabled the staff at Borders to have immense buyer knowledge that helped them in decision making. They were then able to stock the right books. This in turn ensured that their name as a bookstore that has just the right books was entrenched with many book buyers. As a result, their sales grew and the profitability objective was attained (Knowledge@Wharton, 2000). This business approach persists to date

In Barnes &Nobles, the business approach mainly targets selling volumes at lower prices. As such, the bookstore is renowned for its generous discounts, which range from 40 to 90 per cent. The brick and mortar stores that belong to Barnes &Noble are enormous with some equipped with shopping carts ready for the shoppers. The competitive edge for Barnes & Nobles has remained the off-price and discounts offered on the books (Knowledge@Wharton, 2000). As a result, the company has over time managed to capture the market share that thrives on cheap books.

Websites

• The Amazon website (www.amazon.com) is quite a user friendly with helpful tips to the customer. The website is divided into various sections that include categories such as the ‘new and notable’, ‘new paperbacks’, ‘what we are reading’ and ‘featured category’. As a customer puller, the discount message is placed strategically on the top of the website. Overall, the Amazon website is well organized and has a combination of text, book covers and links that expound on authors, the books and the selling price. The Amazon site has categorized books into various categories thus ensuring that the shopper has ease when selecting their preferred reading genre.
• The Barnes & Nobles website (www.barnesandnoble.com) is a pale comparison to the Amazon website. At first glance, the website lacks the colour and details evident on Amazon’s website. The dominant feature of this website is the new book releases. On top of this, is a membership invitation that promises to save up to 40 per cent of shopper’s money daily if one takes up membership. The website also recommends books to shoppers in the ‘unputdownable’ selection. Unlike Amazon whose discount details are strategically placed at the top of the page, the B&N discounts are within the page and in fine print too. They also have an offer section, which occupies the lowest position on the page.
• The Borders website (www.borders.com) is the most colourful of the three but lacks the details exhibited on Amazon and B&N websites. The right-hand corner is reserved for offers and discounts. A revolving banner is strategically positioned offering an insight into books recommended by the Borders book club. The website’s dominant feature however is the new fiction and non-fiction books section. The website also has a section where the top-ranking pre-orders are ranked. Overall, I would rank the Amazon website as the most user-friendly website because it combines efficiency and good website layout.

Use of Communication Technologies

Amazon uses integrated communication technologies to send and receive information from its customers. A personalized homepage for each shopper that lists products related to previous purchases is one such strategy. The company further sends emails to its shoppers alerting them of offers and book releases. Additionally, it gives bloggers a platform to air book reviews and wishes list items (Pieniazek, A. 2007). Barnes and Nobles on the other hand use integrated communication strategies to get information about customers. This information is later used to contact the customers on book releases. B&N allows the client to create online accounts, enrol for the loyalty programs, review books, get gift reminders and apply for the B&N MasterCard (www.barnesandnobleinc.com). The use of efficient communication technologies is also credited with increasing the bookstore’s ability to process transactions by approximate 30 per cent.

At Borders, communication technology is used as a holistic approach to reach customers. Through communication technology, the store delivers its marketing messages to the clients. The bookstore also uses a store locater function to enable the users to locate the brick and mortar store. Shoppers thus have the option of either ordering online or picking the same physically. Borders main electronic marketing tools are email newsletters and email messages (Pruell, C. 2004).

Ethical, legal and security issues

On legal issues, the three bookstores ensure that copyright laws are upheld by working with publishers and writers to ensure they get their royalties and dues. The three bookstores maintain terms and conditions and or disclaimers with customers regarding the use of customer accounts online. By doing this, the bookstores pass all the responsibility to anything that happens under the customers’ account to the individual user.

The three bookstores apply similar measures in ethics. This means that no customer information can be given out to a third party without the direct approval of the client. This also applies to security especially for the online transactions. First time buyers are required in all the three scenarios to provide relevant personal information before books can be shipped.

Conclusion

The three bookstores are a testimony that indeed success in business depends on the ability of each business entity setting clear business models. Thus, competition does not need to ape each others business approach.

Since its inception, Amazon has continuously made business innovations which are driven by huge investment in Information System and Technology to become one of the largest internet retailers in the world. The company has taken advantage of opportunities created by the internet, by setting up a powerful website to sell books and other products directly to customers online. The digital bookstore created by Amazon has revolutionized the bookselling industry, emerging as the most preferred market place for books.

Amazon does not maintain a physical inventory of books and other products that it offers for sales. Instead, the company relies on a network of distributor and business associate to maintain the stock inventory. This enables the company to sell books at a low cost than other physical bookstore. This is because the company does not have to spend money on stock maintenance and large number of staff. The company has continued to invest in technology that provide the most satisfying and personalized experience for millions of its customers. This include fully automated recommendation search engine which replaced lists generated by human. The technology also enables Amazon to captures customer comments and gives recommendations to those who buy books through its website. In addition, the company monitors visitor traffic on its website and collect important data like the number of people visiting the site, the web pages they explored, time spent on the website, and the link which directed them to Amazon website. This information is used in evaluating buying patterns and customer preference.

In order to give value and retain customers, Amazon provides superior customer services backed up by technology. This includes personalized recommendations, automated order system, online customer review, online tracking and shipping and ability to find products and pay with a single click. Recently the company introduced Amazon.com Marketplace where customer and third party can sell used books and other items. This has helped to extend Amazon visibility on the Internet making it a household brand where customers can find everything they want.

Amazon can make use of public digital kiosks to improve its business. The kiosk will provide interactive browsing hence allowing customer to easily search for products on its website. The kiosk should include simple navigation tools which can be used by everyone, every time. This way, customers can quickly find the products they are looking for, compare prices, purchase and track the shipping. The kiosk will also allow those people who don’t have computer and/or internet connection to buy and sell online.

Amazon is the leading and the largest online retailer in the world. The company has continuously used technological innovation since it was started in 1994, hence revamping the bookselling industry and E-business in general. Amazon use technology in all aspects of its operation including sales, inventory management, ordering, tracking and customer service. The company has allowed other company to integrate their website to that of Amazon hence extending the company’s visibility on the internet. Amazon could improve its business by introducing digital kiosks which allow customers to search, buy and tracks their order easily.

Introduction

It is hard to imagine an organization that engages more with continual and drastic disruption as Amazon. It started in 1994 with the disruption of the bookselling market. Having gathered publishers and booksellers on a global scale, they have created an immense value of such efficient and cheap distribution of books, which was not imaginable before. However, that was only the first yet already significant disruption, which influenced the market.

Further, Amazon went on tablets and e-readers, moving the logistics towards the disruption of Apple, Samsung, and Sony (Galloway, 2017). The latter three used to dominate the market, yet Amazon has proven its power. Then, at the end of 2016, Amazon moved beyond its grocery stores based on a new technology to ensure more efficient and enjoyable shopping: in mid-2017, it purchased the Whole Foods chain. Yet again, Amazon has taken up something even bigger and bolder, an intention to transform the US healthcare system in cooperation with JP Morgan and Berkshire Hathaway.

With its money and such massive disruptions, one can consider Amazon to be a giant killer rather than a disruptive innovator. It is also plausible for the reason this giant business eradicates the opportunities for small businesses and alternative visions to take place and maintain their positions. It demolishes not only unsustainable and inconvenient business models and values, but also alternative cultural businesses that do not possess such amount of money and power (Taplin, 2017). Of course, Amazon is involved with bitcoins in both ways: selling them and accepting them as a digital currency. This does not have a significant impact on the business now (Galloway, 2017), but in the future, engaging with bitcoin can be the most innovative decision in the global healthcare market.

Amazon

The space sector has always been both a vivid dream and a display of the most promising innovations for both humankind and organizations involved in its exploration and research. At first, those organizations were states, yet since the beginning of the 21-century, the space sector has been actively commercialized (Cobb, 2020). Bezos’ Blue Origin has been created specifically for the presence and growth in the space sector, thus introducing both the dominant player in the space sector and a new area for Amazon. Another Bezos’ project is Amazon’s Kuiper, which recently entered the race with 3236 satellites (Logsdon, 2020, p. 6). Currently, the private investment comprises 500 Million US$ and disinvesting 1 BLN US$ from Amazon per year (La Regina, Hufenbach 2020, p. 112). While Amazon’s projects are in charge of delivery service, Blue Origin is intended to space transportation.

Traditionally, the space sector used to be state-monopolized, and all the development was state-led and managed. The space agencies and service providers used to direct their research and technological innovations to the state or were owned by the state. However, nowadays, one can observe a drastic change towards the commercialization of the space sector, which can be signified as a significant historical point on the history of space exploration.

Here we will consider four entrepreneurs and the corresponding space businesses to analyze the chances of Amazon to succeed in this area. First, Elon Musk and the SpaceX with the space exploration offer represented by Falcon 9, Falcon Heavy, Dragon. Musk’s vision is to “build a greenhouse on Mars to assure food provision to remote and disadvantaged areas” (La Regina&Huffenbach, 2020, p.112). Second, Paul Allen and his Stratolaunch, which is designed to enable everyone to be connected. Third, Richard Branson aiming at the provision of survivability to everyone with his Virgin Galactic. And finally, Jeff Bezos and Amazon’s Blue Print with his firm priority to customers’ desires.

In terms of private investments, Elon Musk and Jeff Bezos are the undoubted leaders (1.8 BN US$ and 1.5BN US$ correspondingly). Then go Richard Branson (680 MLN US$) and Paul Allen (300 MLN US$) (La Regina&Huffenbach, 2020, p.112). One could say that there are two main competitors instead of four since the investments drastically differ. Moreover, indeed, the ability of the agency’s procurement, as well as the general technological innovative development is undeniably dependent on money at disposal.

From the description of the four entrepreneur’s visions, Bezos’ one seems to be the most encompassing and fulfilling consumer demand. Such a vision helps set a fluid agenda capable of adjusting to the demand and overall market pressures. However, one can observe a slight but gradually evolving trend in the liberalization of user-data gathering (Haas, 2020). Another potential obstacle for Amazon’s development in the space sector, which comes from a broader socio-political context, is the shift in socio-political agenda and discourses towards more equal and sustainable production. Here, of course, Amazon would be in the weakest place since the priority to the customers goes at the cost of workers.

Network Effects

Amazon is an exemplary business that manages to design its features in such a way that they strengthen and enhance network effects. In fact, a variety of network effects type has been entrenched into the business model of Amazon. Thus, the network effects are an inherent feature of Amazon’s business model. Amazon knows how to create them and use them for their benefit since the very beginning.

First, it was related to the function of a product review: the more reviews a product gets, the more people use Amazon to read reviews about this product. This is an example of a one-sided network effect that was present almost from the very beginning. Later on, two-sided network effects have emerged with the emergence of opportunity for third parties sellers to distribute their products through Amazon. This feature allowed the sellers and buyers to be mutually attracted. Moreover, with the implementation of the recommendation system, Amazon has established yet another side effect. The machine learning and its outcomes operate a lot like same-side effects (Moore & Tambini, 2018, p. 27). Although they create a willingness to return and spend time on Amazon for the consumers, it likewise creates barriers to entry, e.g., new types of products.

Social Networks

Apart from other factors, Amazon’s success lies in the excellent strength of its online presence, which can be regarded as a digital marketing strategy role model. The retail giant effectively figures out how to use the fame of different channels to lead back to Amazon item pages. It uses the whole variety of social media channels like Twitter, Instagram, Facebook, Pinterest. Now they also use their own “Amazon Spark,” enhancing their marketing performance even more.

There are three fundamental aims of including SMM in a marketing strategy: 1) attraction of new clients; 2) achievement of an increase in customer loyalty; 3) branding. SMM also involves a great variety of methods. For the reason each social media platform varies in specialization and target demographics, Amazon’s strategy varies (Moore & Tambini, 2017). However, one of Amazon’s most powerful tools in creating customer loyalty is Amazon Prime, a service providing a variety of benefits to the most loyal customers. Amazon uses Twitter actively for humorous engagement with the audience. Apart from their official main account with over three million followers (@amazon), the company also uses a variety of other official accounts, e.g., @AmazonHelp, @AmazonNews, and others, for different products and even geographical markets.

Sharing Economy

Amazon is an exemplary business in terms of customer engagement. To get a customer to the phone app, social networks, website, and, most importantly, to the final purchase, Amazon uses the most innovative techniques of personalization. Individual customization through the algorithms and data-gathering helps Amazon achieve incredible customer engagement because of the combination of native recommendations and their relevancy to the individual. Another crucial feature intended to drive consumers to action is proactive consistency. The undoubted priority to the consumer is Amazon’s famous imperative. The business is consistent with it, which is visible through the variety of customer’s support services and rules. The more loyal a customer is, the more benefits s/he has. Another crucial point here is the recommendation algorithm, which has been continuously developing along with the implementation of Amazon Prime. The latter is a powerful tool intended to strengthen both customer loyalty and customer engagement.

Facebook

Facebook is one of the most important social media channels for Amazon. Apart from monthly tens of thousands of external posts and comments, Amazon also has its official page on this social media. All these posts can be used not only for enhancing customer engagement but also for qualitative and quantitative analytics of customers’ perceptions, trends, and etcetera. The official page aims at promoting both the company news and feature products. Another technique used for the same purposes is cooperation with influencers.

Amazon seems to avoid the free-rider problem, however, it can be seen as a free-rider itself. An example here could be using people’s time and resource investment in the core of their business model. Specifically, the reviews system can be regarded as a tool encouraging Amazon’s free-riding. Another example is users’ data gathering: while users provide (very often unknowingly) a huge amount of data, Amazon (and Facebook) uses this data for profit.

Rent the Runway

The relevant criteria here are the following:

GLM, or gross margin per customer lifespan, i.e. an expected profit over the average customer lifespan. The formula for the calculation is revenue minus costs per a customer. According to Clement (2020), in 2019, Amazon spent almost 18.88 BLN US $ on marketing, 37.9 BLN US$ on shipping, and 40.23 BLN US$ on fulfillment. In total, costs comprise 97 BN US$. Average annual expenditures of Amazon’s Prime members are 1,400 US$, and 600 US$ for non-Prime members, we take an average of 1000 US$. In total, by end of the 2019, there were 197 MLN of customers worldwide. Thus, a cost per customer is 492 US$. Hence, GLM = 1000 – 492 = 508 US$.

Retention rate, or the criteria of customer loyalty. As mentioned earlier, Levin (2016) demonstrates that 73% of Amazon Prime’s subscribers show loyalty, which grows with the time spent in interaction with Amazon (up to 91-96% after just a year). Thus, we set the retention rate for Amazon as an average between these three numbers, i.e. 87%. Discount rate, or inflation, usually set by 10%. The formula used for the calculation of the customer lifetime value: GLM multiplied by retention rate and divided by (1+rate of discount-retention rate). CLV = 508×0.87/1+0.87-0.1=249,7 US$.

Table 1. Average customer annual expenditures on Amazon

References

Clement, J. (2020) Worldwide Amazon marketing expenditure. Statista. Web.

Cobb, W. N. W. (2020). Privatizing peace: How commerce can reduce conflict in space. Taylor & Francis.

Galloway, S. (2017). The four: The hidden DNA of Amazon, Apple, Facebook and Google. Random House.

Haas, M. (2020). Space security: The next decade. CSS Analyses in Security Policy. Web.

La Regina, V., & Hufenbach, B. (2020). Space exploration and innovation: An ESA perspective. In Space Capacity building in the XXI Century, 109-121. Springer, Cham.

Logsdon, J. M. (2020). The United States in space. Asia Policy, 27(2), 5-11.

Moore, M., & Tambini, D. (Eds.). (2018). Digital dominance: the power of Google, Amazon, Facebook, and Apple. Oxford University Press.

Taplin, J. (2017). Move fast and break things: How Facebook, Google, and Amazon have cornered culture and what it means for all of us. Pan Macmillan.

Amazon’s board of directors is not entirely independent from the management due to the fact that Jeff Bezos, who serves as the Chairman of the Board, also happens to be the CEO of the company. In 2018, more than a quarter of the shareholders voted for replacing him with an independent chairman (Sum Of Us, 2018). However, as of today, Bezos retains both positions despite the conflict of interest.

Amazon executives share a significant amount of experience between them and, most importantly, have been working at the company for a long time with very few exceptions. For example, Brian Olsavsky, who holds the key position of Chief Financial Officer, joined the company in 2002 and held various roles before he was appointed Senior Vice President (Officers and Directors, n.d.). Several executives have been working at Amazon for more than 20 years (Officers and Directors, n.d.). Some of the newer members of the top management have gained vast experience working for other companies and the US government. The notable examples include Dave Treadwell, who worked for Microsoft for 27 years, and Jay Carney, who served as the White House press secretary under Barack Obama (Bishop, 2016; Kim, 2019). Overall, Amazon’s management team is among the most experienced in the US.

Salaries of Amazon executives are often lower than in competing companies. Jeff Bezos’ salary has remained stable at $81,840 for many years (Levy, 2017). However, Bezos has been one of the wealthiest people in the world for the past few years, thanks to his stake in Amazon. Other executives’ overall compensation significantly benefits from their share in the company as well. For example, in 2016, Jeffrey Wilke made almost $33 million, and Jeffrey Blackburn earned $22,2 million (Levy, 2017).

Overall, Amazon prioritizes stock-based compensation for employees at all levels (Levy, 2017). Hence, while executives’ salaries might seem not on par with the competition, the compensation package is very lucrative, especially considering the dynamics of Amazon’s share price. Moreover, this policy helps to prevent managerial entrenchment, as the compensations of the executives depend on the company’s performance on the stock market.

The control over Amazon shares is not as tight as in many competing companies. Insiders own less than 17% of the stock, and Jeff Bezos has been continuously reducing his stake during the past few years (Amazon: control freak, 2016; U.S. Securities and Exchange Commission, 2018). Amazon has a “one share, one vote” policy, meaning that Bezos does not have majority voting rights, unlike the founders of Facebook and Google (Amazon: control freak., 2016). However, his stake’s value still represents a serious obstacle for a potential takeover (Amazon: control freak, 2016). Moreover, Jeff Bezos has proven to be one of the most efficient CEOs of the last decade, making his authority extremely difficult to challenge.

Institutional investors own the majority of Amazon’s outstanding shares. As of December 2020, they hold ownership of 58.29% of the stock, with the Vanguard Group being the biggest stockholder (CNN Business, n.d.). Proxy fights and large-scale sale of shares are some of the potential disadvantages associated with high institutional ownership. However, it might be less of a problem in Amazon’s case, considering that not a single institutional investor owns more than 7% of the stock.

Throughout the past few years, Amazon has been subject to several challenges by activist shareholders. Besides trying to replace Bezos as the Chairman of the Board, activists submitted several resolutions on equity, environment, and lobbying issues. In 2019, activists forced the company to pledge to a significant reduction in fossil fuels use. (Romano, 2020). However, in 2020, none of the shareholders’ resolutions passed. Hence, the influence of activist groups on the company policies remains limited.

References

Amazon: control freak. (2016). Financial Times. Web.

Bishop, T. (2016). High-ranking Microsoft engineering exec David Treadwell leaving for Amazon after 27 years. GeekWire. Web.

CNN Business. (n.d.). Amazon.com, Inc.. Web.

Copland, J. R. (2020). Proxy monitor 2020: Voting results are in: Amazon, Chevron, McDonald’s, and more. Manhattan Institute. Web.

Kim, E. (2019). Amazon’s executive org chart, revealed. CNBS. Web.

Levy, N. (2017). This was Amazon’s highest-earning employee in 2016 — and it wasn’t Jeff Bezos. GeekWire. Web.

Officers and Directors. (n.d.). Amazon. Web.

Romano, B. (2020). Amazon is again targeted by activist shareholders with a barrage of governance and social justice proposals. Seattle Times. Web.

Sum of Us. (2018). Roughly 40% of independent Amazon shareholders back proposal to create an independent board chair. Web.

U.S. Securities and Exchange Commission. (2018). Schedule 14A. Amazon.com, Inc. Web.

Amazon’s success makes many people wonder at what price this breakthrough was obtained. The purpose of this documentary was to explore the goals and motives that drive the company and its head, Jeff Bezos, on the path to progress (FRONTLINE PBS, 2020). As it was found out during the investigation, the company’s policy is built on several main points. They are providing a good standard of living for the coming generations, helping people make decisions, and developing a new course for the future of all humanity.

Reflections on the future are the main idea of Jeff Bezos, which is reflected in all his projects. From the first thesis, Amazon improves life for ordinary people; for example, providing them with many convenient services, such as fast delivery within two days (FRONTLINE PBS, 2020). However, this movement has a powerful effect on the economy in general, as the corporation eventually crushes smaller companies, which causes persons to lose their jobs and income.

The weakest argument in favor of Amazon’s policy is to help people make decisions. The company implements this strategy by collecting a vast amount of data about people that are then used, for example, for contextual advertising. As one of the Amazon employees said, the one who owns the information is the king (FRONTLINE PBS, 2020). Therefore, the current collection of information may be fraught with manipulation, and this cannot be tolerated.

Finally, the main argument in favor of Amazon’s policy is creating a stable future for forthcoming generations. According to Bezos himself, the consolidation of all forces is necessary to implement this concept. Our planet is unique, and humanity will have to go into space to preserve it (FRONTLINE PBS, 2020). For these long-term plans, the owner of Amazon expands his business so much that it allows him to develop new technologies and implement his space program. Given that the concept of long-term plans worked with the company itself, such an approach to a global goal can be justified.

Thus, Amazon is a unique example of a corporation that used the full potential of capitalism to achieve its goals. In my opinion, this documentary gives a clear idea of the company’s policy and its position in the world. This video is extremely informative and allows thinking about the role of Amazon in the lives of people, as well as about the future of our planet and how to save it.

Reference

FRONTLINE PBS. (2020). Amazon empire: The rise and reign of Jeff Bezos (full film) | FRONTLINE [Video]. YouTube.