MGT/230
Amazon.com Case Study Analysis
Amazon.com—Keeping the Fire Hot
Amazon.com has gained the No. 1 spot as the world’s largest Internet retailer. But never content to rest on past laurels, CEO Jeff Bezos keeps introducing and upgrading Amazon products and services.
It’s hard to keep pace with new versions of the Amazon Kindle Fire, Prime Instant Video TV, and movie content streamed on demand. There’s a variety of cloud computer services. And, Bezos keeps increasing investments in new distribution centers staffed increasingly by robots. It’s all part of a push to make Amazon the go-to choice for fast—even same-day—deliveries of as many of the products we consume as possible.
Decision Making and Innovation
From its modest beginning in Jeff Bezos’s garage in 1995, Amazon.com has grown into the most megalithic online retailer. Bezos continues to diversify Amazon’s product offerings and broaden its brand. Beyond simply finding more and more products and services to offer, he knows that he has to innovate in order to prevent his brand from becoming stagnant. No one is ever sure what will come next under Bezos’s guidance. His guiding question is: “What kind of innovation can we layer on top of this that will be meaningful for our customers?”
Amazon’s Kindle almost single handedly launched the ebook revolution. Also, Amazon Prime could be seen as a revolution. Prime members get free two-day shipping and discounted one-day shipping as well as access to Amazon Instant Video, movie, TV and music streaming, and free content. It’s all designed to keep customers plugged into Amazon. Bezos calls Amazon Prime “the best bargain in the history of shopping, and it’s going to keep getting better.”
There’s no shortage of competition. Amazon has squared off against Netflix, Apple, and Google in realms of both hardware and digital entertainment. It bought top-shelf audio book vendor Audible.com and later added shoe and clothing merchant Zappos.com. Then came acquisition of Boston-based Kiva Systems. Kiva’s automated guided robots deliver product to workers at pick stations, allowing Amazon increased efficiency (and reduced labor costs) in its worldwide distribution centers.
Bezos as a Decision Maker
Rather than sticking to just the analytical step-by-step process, Bezos isn’t afraid of informed intuition. He uses creativity, flexibility, and spontaneity when making key decisions. He seems comfortable with abstraction and lack of structure when making decisions and also isn’t afraid to fail.
Seeming not to worry about current earnings per share, Bezos keeps investing to make his company stronger and harder to catch. Its millions of square feet of distribution fulfillment space keep growing domestically and around the globe. The firm’s products and services are continuously upgraded and expanded. Drones are ready to fly Amazon deliveries to customers. But will these investments pay off? Is Bezos making the right long-term choices?
Even as Amazon’s stock values fluctuate, Bezos still believes that customer service, not the stock ticker, defines the Amazon experience. “I think one of the things people don’t understand is we can build more shareholder value by lowering product prices than we can by trying to raise margins,” he says. “It’s a more patient approach, but we think it leads to a stronger, healthier company. It also serves customers much, much better.”
What’s Next?
Amazon.com has quickly—not quietly—grown from a home operation into a global ecommerce giant. By forging alliances to ensure that he has what customers want and making astute purchases, Bezos has made Amazon the go-to brand for online shopping. After its significant investments in new media, services, and distribution, does the company risk losing its original appeal? Will customers continue to flock to Amazon, making it the go-to company for their each and every need?
Source: Schermerhorn Jr., J.R., Bachrach, D.G. (2016) Amazon.com—Keeping the Fire Hot”. In Exploring Management (Cases for Critical Thinking).
Case Analysis Questions
Answer the following in up to 350 words each.
Bezos once said: “Amazon may break even or even lose money on the sale of its devices.” The company expects to recoup the money later through the sale of products, with a further boost from its annual Prime membership fee.
Explain how this strategy shows Bezos as a systematic and intuitive thinker.
| An intuitive thinker is someone that is a very observant. They also use past experiences to learn from and better themselves for upcoming experiences. From this case study, we learned that Amazon started in the garage of Bezos, but has since grown to one of the largest online retailers. In order for a business to be successful, it is important that the owner pays attention to mistakes in the past in order to improve in the future. Amazon has been in business for over ten years and in this time has grown to become the largest online retailer, thus showing just how intuitive Bezos is. We can also see that he is a systematic thinker because he is able to solve problems by first thinking through the options and outcomes. Benzo shows systematic thinking by choosing to constantly upgrade the products and services. Benzo continues to invest in the company, thus resulting in Amazon standing out from other companies. This shows how Benzo is not afraid to fail, as he continues to use his creativity, flexibility, and spontaneity when making decisions for the company. He has also used systematic thinking when making the decision to have drones that can deliver packages to customers. This decision is outside of the box and is unlike any other company in this way. Amazon continues to branch off into different areas, such as the kindle, prime instant videos, and streaming services. With this in mind, we can see how Benzo’s ideas continue to grow and improve the company. |
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It seems like everyone is streaming these days and there are a growing number of providers. Amazon is a player in the digital entertainment market, but hasn’t taken a clear lead.
Determine, based on the strengths of the company, what decisions should be made to ensure that Amazon jumps ahead and becomes the “No. 1” source for digital content streams.
| With this case study, we can see how Amazon has earned the number one spot as the largest internet retailer. Amazon has entered into the digital entertainment market, which has some clear competitors, such as Netflix, Apple, and Google. Benzo has showed just how he is a systematic and intuitive thinker, so now he should really start to focus more on the digital entertainment. With his ability to use his systematic and intuitive thinking, he can work towards being the leader in the digital entertainment market as well. Benzo has continued to grow and invest a great deal in the distribution centers and warehouses, but now he should focus his attention on the digital streaming. Today, technology is constantly growing and changing, so it would be best for Benzo to focus on this area to become a clear leader in the digital entertainment market. I think it would be a great idea for Benzo to listen to his guiding question: “What kind of innovation can we layer on top of this that will be meaningful for our customers?” It is important to think about this question when looking to step up in the digital entertainment market because you want to ask yourself how you can improve upon what you have already and how it will be of benefit to the customers. Benzo needs to remember that the customers are his number one priority, as he has in the other areas of Amazon, to truly figure out the best way to continue to benefit them and prevent from going stagnant in this area. |
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Compare the latest initiatives coming out of Amazon with those of the actual or potential competition.
| Amazon prime and student prime are some of the newest initiatives to come out of Amazon. With an Amazon prime membership, customers get free two day shipping. There is also discounted same day shipping for many of their products as well. The prime membership also gives access to instant video, movie, TV, and music streaming. One of the best things about Amazon is that there are many different distributors that sell their products on their site. This is great because you can search for a certain item, view the different options, and make the best choice for what you need. This allows for the customers to find the product they need at the best price possible. Personally, I use Amazon for buying so many things because I can usually find them cheaper than I would at another store, for the same exact product. Some people may feel that the price of the annual prime membership is hefty, but it really is a reasonable price for the perks of prime for the entire year. The student prime is another great option that Amazon offers for college students. The prime membership for students is half off the original prime membership with all the same perks. This is great for students, especially if they do a lot of online shopping because they are offered a more affordable membership price with all the same perks as the regular Amazon prime membership. Amazon has a large selection of products, that are also almost always in stock, thus making it easy to shop compared to having to go store to store to find one specific item. |
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Conclude whether or not Bezos is making the right decisions as he guides the firm through today’s many business and management challenges.
| When it comes to Benzo making decisions for the firm, I believe that he is making the best decisions to help guide the firm through today’s many business and management challenges. When reading this analysis, I was able to better understand why Amazon has become so successful over the years. Benzo is not afraid and continues to invest in the company to make it stronger and harder to catch up with. Benzo is not afraid of making decisions with lack of structure. It seems to me that Benzo understands that decisions have to be made and though some may not be easy, they are necessary to continue to grow the company. Benzo definitely has the mind of a leader, and though the stocks are not always up, he believes that customers are key. Because of this, Benzo works hard to ensure that the customer service of Amazon is their priority. It amazes me that Benzo started Amazon from his garage and has been able to grow as much as they have in this time frame. You can tell that Benzo is not afraid to think outside of the box and really push the limits when it comes to new innovations. Benzo is dedicated and committed to the business and works hard to ensure the right decisions are being made to truly benefit the company and put the customers first. As times and technology continues to change, Benzo continues to push the limits by taking chances on things such as the drone delivery service and investing in robots. Taking risks can be challenging, but I think that having the ability to take such big risks shows the character of Benzo, and just how much he continues to think outside of the box to become the best company. I truly believe that Benzo will continue to be successful, as he has a very creative, intuitive, and systematic mind. |
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