Case Study Analysis Business Strategies of Amazon †Free Samples

Question: Discuss about the Analysis Business Strategies of Amazon. Answer: Introduction Organizations worldwide are adopting online environments for doing business and establishing information systems to support their business strategies. Amazon is a popular organization that has adopted information systems for gaining competitive advantages in the retail space. This case study would explore the use of Information technology systems used in Amazon and would explore its different components including, corporate structure, corporate officers, regulatory requirements and risk management practices of Amazon. The case study analysis results would be used for making certain recommendations on improving the IT systems of the company as well as enhancing its security posture(Imran, 2014). Amazon was started by Jeff Bezos in 1995 as an online book seller and soon it started to deliver books to 50 states in 45 countries across the world. In starting, the company had a website and an order fulfilment system connected with a huge database that was run over Digital Apha Servers. By 2000, the Information system was revived with Oracle DBMS, Epiphanys analysis software and manulogistics logistics application. Business to business integrated system was provided by Excelon while Amazon Web Services and Simple Storage Service were developed by the company in-house. This report would explore the current information systems and IT management practices used by Amazon. It would make an attempt to understand the nature of the ecommerce retail business, governance structures, processes, policies, corporate offices, regulatory requirements and risk management practices of Amazon(Bluschke, 2016). The nature of the business Amazon is e-retailing organization that has 35 million customers and makes sales of $5 billion annually. Amazon has supply chain efficiencies with which it is able to provide products at affordable rates to its customers. Custom shopping experience is provided by Amazon online through product search, inside book search, wish list creation, and so on. Amazon offers multiple products including books, clothes, accessories, electronics, and more. It is present in different countries including USA, UK, Canada, China, Japan, Germany, and more(ICA, 2014). Ever since its inception, Amazon has been a successful retailer and has been able to differentiate itself from its competition such as eBay and Borders. With the Amazon platform open to resellers and integrated view of customer reviews and referrals, the company is able to capture more and more customers every time. The company has expanded into its technology offers and digital content. However, in the technology space, the company faces director competition from other giants in the space including Google, Apple, and Microsoft(Gordon, 2014). In order to evolve in the digital technology market Amazon needs to provide high quality of services. The key resources of the organization are focused on innovation and service provisions as well as on maintaining and improving its resources that include fiancs, human capital, intellectual capital and physical resources. With the large retail consent that company has, it is able to stay up with the competition as well as gain significant profit s to drive investors to them. Amazon is able to pay its suppliers in 22 days which is much less time than the competition that makes this payment within 45 days. This has also added a competitive advantage to the company by enabling a strong supplier relationship(Aggarwal Travers, 2001). Amazon has a large customer database which allows for economies in scale as well as scope with usually supportive business services offered on the same platform such that marketing efforts used for promoting outside of its platform is less. Amazon acts as an on stop shop for most needs of customers so the chances of customers switching over to competition are reduced(Ganapathy, 2015). The Kindle platform and AWS brings most revenues t the company. Amazon Prime is also used to boost its digital market through the generation of advertisements. One of the strength of the company is customer satisfaction which is due to several experiential benefits that the platform provides to its customers including peer reviews, easy checkouts, tailored product suggestions, proactive response to demands through disruptive analysis of customer data(JIRA Security and Privacy Committee (SPC) , 2007). Information System at Amazon The information system of Amazon is based on service oriented architecture (SOA) which provides opportunity to the companies to use data and logic multiple times and enables the company to develop a variety of software components rapidly with sustainability. The framework enables integration of modular and structural components along with the support for large transactions. Services can be accessed from multiple platforms and from different locations such that consumer demands can be fulfilled instantly(AHIMA, 2014). The information system of Amazon mainly consists of transaction processing system, recommendation system , and interactive search system. Transaction system allows customers to personalize their profile and order products online through credit or debit card payment and using one click purchase feature. Recommender system makes recommendations to customers based on their past purchases and searches. Interactive searching helps customers explore catalogues to find specific items(AJAYI, 2003). Besides these specific information systems, the company uses enterprise wide IT systems for managing its retail supply chain that includes Enterprise Resource management system and Customer relationship management system. ERP database holds customer information and automates ordering process by searching the nearest distribution centre automatically. CRM system is uses for collecting all the customer data including orders, transactions, card records, profile, past purchases, wish list, product reviews, and customer feedback(Imran, 2014). Information technology systems need to be sustainable and continuously improved in order to sustain business operations in the modern world. Amazon has been upgrading and improving them ecommerce systems through the use of Big Data Analytics that uses huge data sets generated from page visits, clicks, user time on website, their demographics, social information and visit times(MYOB, 2016). Big data also gives the analysiss information about the demand and supply scenarios in every stage of the supplely chain of Amazon. Amazon has invested a significant amount on its IT systems including website management, search functionality, customer interaction, transaction processing, and order fulfilment. These systems not just need a huge investment but also a well-developed It infrastructure which Amazon has(Aggarwal Kapoor, 2012). Information technology is important for Amazon as the company has to deal with a large number of products, enquiries, requests for gift wrapping, and choice of shopping methods. Amazon uses Apathy Cloud software for managing its marketplace, inventory, and order management system. IT is used by the company to create a sustainable advantage such that the company is able to differentiate it from competition. Amazon Web Services provide storage and computing services to the corporate which generates a revenue stream for the retailer. Organizations that do not have finances for investment into IT are usually suitable for AWS(Ganapathy, 2015). Governance structures, processes, and policies IT governance has three main objectives to fulfil and these include regulatory or legal compliance, operational excellence, and optimum risk management. It results from a combination of factors including structure, leadership, and processes. IT governance usually comes in two forms that include governance institute model and archetypical model(Arnold, 1991). The institute model has objectives like strategic alignment of IT with business processes, value generation from IT, IT resources management, risk management, performance monitoring, IT principles adherence, IT architecture development, IT infrastructure development, understanding of business application needs, and investment prioritization for IT systems. IT governance structure talks of the distribution of rights to decision making by different parties in a system(Mortel, et al., 2012). As per the archetypical information technology governance model, IT governance involves two research streams including firm size and factors affecting decisions. Contingencies affect the structural decisions of the organization which can be centralized or decentralized. In centralized structure, economies of scale are the focus while in a decentralized structure(Mortel, et al., 2012); customization and integration of changing processes are important(Chittum, 2011). The decision making structures are affected by the archetypical political structures that include IT monarchy, business monarchy, and IT duopoly, federal, feudal, and anarchical structures(VISA, 2000). Organizations can assess their own IT systems using different models including Carnegie Mellon's capability maturity model integration and COBIT framework management guidelines. CMMi identifies 5 maturity levels of IT systems in six categories including communication maturity, competency maturity, governance maturity, partnership maturity, technology maturity, and skills maturity. In COBIT framework, beside the maturity models indicating value delivery, key goal indicators (KGI), and critical success factors (CSF), and key performance indicators (KPI) are also determined(Gordon, 2014). Corporate officers and their roles When establishing any organization, a bard of directors is established from top corporate officers including Chairman, corporate treasurer, and corporate secretary. These officers are responsible for providing operational guidance to the corporation. Their responsibilities include fiduciary like achieving financial well-being of the organization and strategic which involving setting up of vision, mission, and policies for an organization. The roles of each of these executive officers include(BMW Manufacturing Co., LLC, 2015): Chairman: A chairman is the primary spokesperson of an organization who signs legal documents on behalf of the board of directors. A chairman participates in board meeting and ensures that they go as per pre-decided agenda. Jeff Bezos is the Founder, CEO, and chairman of the organization. He has served the company as President from 1996 till 1999 and then from 2000 till today(Demir, 2017). Corporate Vice President: Corporate VP chairpersons the company but on ad-hoc basis but also has some regular duties in an organization. Amit Agarwal who is the head of Indian division of Amazon is also Corporate Vice President of the organization. Besides him, there are senior Vice Presidents of divisions of the company including Business Development, seller services, Web services, worldwide digital media, International retail, Finance, Ecommerce platform, North America Retail and Worldwide operations(WikiInvest, 2010). Corporate Board Secretary: The responsibility of the secretary is to create and maintain company records and documents. Minutes of the board meetings are recorded by the secretary. Besides the meetings, there are other corporate records to be maintained by the secretary that include events, personnels records, payroll records, and policies The responsibility of ensuring that these records are kept safe is with the secretary. L. Michelle Wilson is the Secretary, General Counsel, and the senior vice president of Amazon(Buckley, et al., 2015) Corporate Board Treasurer: Corporate Board treasurer chairs the finance committee of the board. The responsibility of the treasurer to maintain the financial well-being of an organization but his duties is not routine. His responsibility include development of budget, maintenance of budget, creating and review of financial policies, investment decisions review, annual finance audit of the corporation. Andrew Beath has been a Director and treasurer for the board of Amazon since 1997(Ward, 2010). Regulatory requirements Regulatory environment plays a significant role in determining any companys success Government imposes taxes and have several other regulatory measures that are intended to promote the economic growth of the organization and provide consumer protection from exploitation by any organization. With an understanding of regulatory environment, an organization can adapt its operations to the regulatory features. These regulatory measurements could be related to taxation, trade policies, economic policies, and politics(DH/Digital Information Policy, 2007). Each of these factors affects the working of an organization in specific regulatory environment. For instance, in case of trade policies, there can be multiple policy requirements such as tax policies, fiscal policy, monetary policy, regulatory policy, government policy and polices about property rights. A trade policy can either prevent or promote business growth in a country depending on whether it promotes free trade or not. Strict tra de policies can lead to trading losses for an organization(Demir, 2017). There are no single set of regulatory requirements that an organisation has to take care of while operating if it is a multinational organization like Amazon as every country can have a different regulatory environment. Thus, the organization is likely to ace different regulatory challenges. For instance, in India, the government has passed regulations that can affect the pricing and sales sourcing which currently Amazon seems to be violating. The organization has not been provided with sufficient time for enforcement and thus, it is a challenge for the organization. This can pose restrictions on the way ecommerce foreign companies operate in India such as Amazon. A major success for Amazon in India has been due to us Cloud tail strategy but it has now become illegal which would lead to a loss of up to 50% of the sales Amazon makes in India(PYMNTS, 2016). In Texas, company faces challenges in its operations due to unfriendly regulatory environment. As per the government rule, a retailer was not required to pay taxes unless it was in the physical nexus. Amazon had physical operations in only 17 states and thus, for other locations, Amazon could enjoy tax free facilities. However, with some legal trucks applied, Amazon was able to save more on taxes. Amazon had a distribution centre in Texas but did not pay sales tax that resulted into legal disputes as government emended $269 million which was claimed as uncollected taxes from Amazon in 2016(Chittum, 2011) Risk Management The risk management practices of the company are considered good worldwide especially in ecommerce Fraud Prevention. It uses latest technologies like statistical data modelling, cloud computing and has scalable distributed systems to support its transactions worldwide. The company has established a Transaction Risk Management Services (TRMS) for designing and building performance software systems and for preventing frauds in transactions(Ward, 2010). Risk management in retail involves identification of security risks that an information system may face and taking steps to reduce or counter the security threats. Several measures can be taken by the retail organization in order to do this such as development of an internal fraud management system which is used by Amazon(COmmon Criteria, Federal Ministry of the Interior ). There can also be certain other measures that Amazon has taken to secure its internal systems as well as the ecommerce system for the protection of consumers including use of Verified by Visa and MasterCard Secure Code while making transactions, establishing a process for managing post-authorizations, using display effective policies, and intrusion prevention through passwords and software updates(VISA, 2012). Recommendations for Improvement Based on the study conducted on the IT systems of Amazon, some suggestions can be made for the improvement of its systems and structures such as: Amazon has good presence all over the world and has established and world class IT systems that are used for managing its operations. However, when it comes to the governance aspect, the company faced several challenges in multiple countries including developed countries like India. Thus, it is recommended that the company works to improve upon its strategies to take care of governance aspects by adopting local approaches to managing its IT systems in specific countries like India(Bluschke, 2016). Cyber crime is increasing day by day and affecting retail operations such hat ecommerce is at a big threat which is the key business model for Amazon. Thus, the company needs to use more intense measures for security and protection of organization as well as consumers. Business model of Amazon can be imitated and thus, it must work on building stronger competitive advantages using its IT systems such that it can stay ahead in competition(Buckley, et al., 2015). Amazon uses ERP systems that have helped it enhance its IT potential but its knowledge management is still an area that needs improvement as it is not integrated to the ERP or IT system of the organization. With its integration, customer issues resolution would improve which would drive up the customer satisfaction for Amazon. Most of the IT systems used in Amazon are standard. However, with adoption of new technologies like Artificial Intelligence, Amazon can create a special bond with the customers as it would allow the company representatives to connect with people in a more engaging manner(Barrett, 1996). Amazon can enhance its synergy between its different systems by integrating the information sources like sales, advertisement and after sales services such that its information systems can be better used to aid the customer at every touch point. Integration can be done with the social networking platforms which would allow the company to promote its products and services getting closer to the customers(COmmon Criteria, Federal Ministry of the Interior ). Amazon can improve its sorting feature on the ecommerce platform by allowing customers to have more filtering options such as sorting of products based on reviews or recent sales Amazon has been facing issues of phishing with customers as it has been continuously improving its systems and thus, it should create awareness about the same to the customers so as to reduce the phishing threats to its customers. Marketing campaigns of Amazon can be customized across different consumer communities and include the suggestions of customers while making customized information available to them Transparency in the systems can be improved if dashboards are provided to sales people for tracking sales across product lines and identifying individual contributions of the sales people while measuring key performance indicators(Chittum, 2011). Conclusions This case study was prepared to identify and analyse the Information Systems Strategies and Information technological management structures used in organizations. For this, the paper took the case of Amazon which is an online retail giant and explored the information systems used in Amazon, corporate structure used in the organization, corporate officers managing the organization, regulatory requirements and risk management practices in the organization. It was found that Amazon used some state of art information technology systems and a variety of information service was provided to its customers through digital media. It uses big data technologies for understand its customers and make modifications in their offers and offer customized recommendations to retain customers. The organization as a very strong database of customers. In the security posture, the company has a special team for managing security of its IT systems and has a very strong fraud prevention program. However, in some areas of IT management, the company is facing some major challenges such as governance. It has faced legal hassles in countries like India and US against the taxation and other legal matters which it is required to resolve. Based on the case study analysis, certain recommendations were made to improve the security posture of the organization as well as enhancement of the IT systems of Amazon. 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