Abstract Science Construction’s business is in planning, developing and building road projects. The major of its clients are municipalities, city governments, and other public sector entities. While the bankruptcy rates for these clients is very low, when economic downturns happen, their ability to pay in a timely fashion also suffers. This leads to businesses such as Science Construction needing to take on additional debt and to find creative methods in order to stay afloat during times of recession. Methods such as selling accounts receivables at discounted rates and taking larger lines of credit through banks and other lending institutions are some of the ways organizations can remain viable when their cash inflows have turned into a trickle. Science Construction is asking the Turkish Courts to postpone their bankruptcy proceedings for a year while they attempt to restructure. Through this, suggestions such as forcing shareholders to pay their debt to the organization, gaining credi
In 1995, former investment banker Jeff Bezos had the idea of using the internet to sell books
directly to customers online via a website. At the time, there were approximately three million
titles in print, (Laudon. K.C. et al. 2007) and any bookstore could only stock a fraction of them.
Whereas, an online, or “virtual” bookstore could offer a much larger selection of titles.
Bezos believed consumers did not need to actually “touch or feel” a book before buying it.
Although there are many psychological triggers that can influence a consumer, Bezos felt that
an online synopsis, tables of contents, and reviews, would be enough to help with selection and
purchase. In addition to the broad selection, Amazon was able to charge lower prices than
traditional High Street bookstores, as it carried very little of its own inventory, relying instead
on distributors, and did not have the expense of maintaining physical storefronts or a large retail
sales staff.
In 1998, Amazon started selling CDs, videos, and DVDs, revising its business strategy “to
become the best place to buy, find, and discover any product or service available online” –
the online Wal-Mart. By the late 1990’s, only a short 4 years after launching; Amazon were
leveraging technology to provide superior customer service through:
• e-mail and telephone customer support
• automated order confirmation
• online tracking and shipping information
• “1-Click” express shopping - the ability to pay for purchases with a single click of the
mouse using credit card and personal information a customer had provided during a
previous purchase
Amazon were blazing-a-trail; not just making internet history but writing the rules of how to
create and scale an online business. By 2004 it hit $4 billion in online revenues, and by 2006
exceeded its sales guidance estimates $10 billion in revenue. (Laudon. K.C. et al. 2007). It has
in fact out-performed any other retailer and grown to become one of the largest internet retailers
on the planet.
The real significance of the success: is Amazon’s continuous innovation in business strategy
and information systems. Not only in leading the online retail industry, but also understanding
data to gain the trust of the consumer. Amazon built its business by being brave and remaining
true to its vision for providing goods and services to consumers, at competitive prices via an
online channel. This approach has allowed Amazon to push the boundaries of technology, not
just accepting that technology exists, but identifying how to utilise it in every step of the
consumer journey and purchasing cycle.
To better understand the elements of success, we can explore the business through the
lenses of the competitive forces, and the value chain models.
The five forces model was developed by Michael E Porter in 1979 and can be used to analyze
the level of competition and the forces that are affecting competition in the industry.
According to Porter’s five forces model, five competitive forces determine industry
profitability: bargaining power of suppliers, bargaining power of customers, the threats of
substitutes, the threats of new entrants and rivalry among existing firms (Kroenke. D. 2007).
Bargaining power of Amazon suppliers: Amazon always has the upper hand on its supply
chain. Suppliers must follow the defined rules, and comply with the specified code of conduct.
Amazon has been able to create a positive working relationship with its suppliers, albeit one of
“do as I say”, so that suppliers have a minimal impact, or effect on their business activities.
Essentially, Amazon can easily switch, or find new suppliers.
Bargaining power of Amazon buyers: Each customer has enough information when searching
for products online and can make choices based on product descriptions, or customers’ reviews.
The customer’s loyalty remains very important for the online retailer.
The threat of substitute products: By displaying various brands, designers and fashion names,
makes it so easy for customers to jump between products, review feedbacks and compare prices
to decide on their purchase.
The threat of new entrants: Amazon is not the only player in the game. We have e-Bay,
Alibaba online; and other traditional retail competitors. The growth of digital technology has
reduced barriers to entry. However, building a brand like Amazon is the real challenge. It
requires strong leadership, time, money and huge effort to challenge Amazon’s status.
Rivalry in the industry: As mentioned before, Amazon is not the only name in the market.
Due to this, I would say that competition is healthy.
An alternative lens is that of Value Chain. “Value chain analysis is an analytical framework
that assists in identifying business activities that can create value and competitive advantage to
the business” (Dudovskiy, J. 2018).
Amazon Inbound logistics: Amazon is fully responsible for its logistics; customer service,
products, prices, return and refund policies. They established an efficient, professional
infrastructure for the business.
Amazon Operations: Amazon operations are organized into three segments: North America,
International, Amazon Web Services (AWS).
Amazon Outbound logistics: Traditionally, Amazon relied on the services of day-to-day
delivery companies such as UPS, FedEx, and TNT. However, the company has invested in its
own air delivery business, Amazon Prime Air (drone delivery system) and Amazon Flex – intrametropolitan delivery services based on the gig-economy. (Dudovskiy. J. 2018).
Amazon Marketing and Sales: Amazon offers a diverse variety of products, based on best
sellers, price or quality. Overnight, and next day delivery, are available. More recently launched
a same-day premium service. A return policy makes it even more convenient for customers.
Amazon Services: Exceptional customer service is a significant feature for Amazon and one of
the main reasons for being among the top in the market.
Technology and Innovation: Amazon has invested in different areas of technology, like
advanced customer databases and analytics tools for recommendation and personalisation,
scalable Amazon Web Services for Amazon.com’s technology infrastructure, fully optimised as
well as automated warehouses and distribution centers along with robotics technology,
advanced delivery with drones, voice shopping with Alexa AI and Echo devices, augmented
reality to see how products fit and test how they look.
In addition, another approach to view the success of Amazon is that of the 5P’s of the
marketing mix, it is one of the oldest yet more robust marketing theories that combines:
Product, Price, Place, Promotion, and Profit.
Product: Amazon has a diverse product offering across a range of categories, from literature,
music and movies to online groceries, cloud computing, and film/TV services.
Price: Amazon offers affordable prices through its overall pricing strategy, combining: cost
leadership, penetration pricing, price skimming, psychological pricing, product line pricing, and
geographical pricing strategies, coupled with many promotional discounts.
(www.mindtools.com).
Place: Amazon operates online, which makes it accessible for shoppers across many
geographical locations. They also ensure that deliveries are made efficiently, and often free for
with specific purchases.
Promotion: Amazon takes pride in its logo type, with the positive curved arrow from “a” to
“z”, also acting as a smile in bright orange. Amazon leverages various traditional media such as
print, sales promotion, public relations, and direct marketing, as well as online marketing and
social media; displaying a consistent message about its products and services, ensuring the
brand is never confused and always recognized.
Profit: Amazon is aggressively expanding and diversifying its products and services, while
ensuring that they are affordable and meet the needs of its customers. As Amazon continues to
scale and grow, there will be a need for more analytics to identify the key cost drivers and
maintain customer satisfaction. This will require innovative information systems to draw
insights from data and in turn drive down cost and increase profitability.
Amazon can not sit back on its laurels. It has acknowledged it must support the consumers
desire for more convenient ways to shop and continuously test new concepts.
When most traditional bricks-and-mortar businesses where scrambling for “online traction”,
their legacy systems held them back; and they merely dipped-their-toes into the online world,
never really causing any concern or threat to Amazon.
However, with reverse about to take place, many traditional High Street retailers are watching
with caution as Amazon is now disrupting the High Street, with “Amazon Go”. Creating a
seamless online to off-line shopping experience with cashless environments; to the point there
are no check-out kiosks, or cash-desks. Consumers are identified in store by facial recognition,
retina scans or finger prints that are linked to their unique online accounts; allowing consumers
to place an order for an item and simply collect it from a High Street store without any human
intervention.
Amazon is unquestionably a global e-commerce leader and has invested heavily in its
infrastructure, services and products. Amazon also continues its strategy for utilising drones as
delivery vehicles and diversifying its services by developing its Video and Music Prime
services.
Yes, Amazon can continue to be successful. As long as the consumers appetite to shop online
remains strong, and Amazon remains relevant to the consumer lifestyles, then they will
maintain a sustainable competitive advantage.
…
References and Online resources:
Fleerackers. T. (2010). Case: Amazon.com.
Retrieved 23rd May 2016. From https://flatworldbusiness.wordpress.com/flateducation/
intensify/creating-a-flat-business/case-amazon-com/
Laudon. K. C. & Laudon. J. P. (2007). Information Systems, Organizations, and Strategy.
Management Information Systems: Managing the Digital Firm 10th ed. Upper Saddle River,
NJ: Prentice Hall.
Kroenke. D. (2007). Organizational Strategy, Information Systems, and Competitive
Advantage. Experiencing MIS. Upper Saddle River, NJ: Prentice Hall.
Dudovskiy. J. (2018). Amazon Value Chain Analysis.
Retrieved 16th December 2018. From https://research-methodology.net/amazon-value-chainanalysis/
The Marketing Mix and the 4Ps of Marketing: Understanding How to Position Your Market
Offering. Retrieved from https://www.mindtools.com/pages/article/newSTR_94.htm
…
directly to customers online via a website. At the time, there were approximately three million
titles in print, (Laudon. K.C. et al. 2007) and any bookstore could only stock a fraction of them.
Whereas, an online, or “virtual” bookstore could offer a much larger selection of titles.
Bezos believed consumers did not need to actually “touch or feel” a book before buying it.
Although there are many psychological triggers that can influence a consumer, Bezos felt that
an online synopsis, tables of contents, and reviews, would be enough to help with selection and
purchase. In addition to the broad selection, Amazon was able to charge lower prices than
traditional High Street bookstores, as it carried very little of its own inventory, relying instead
on distributors, and did not have the expense of maintaining physical storefronts or a large retail
sales staff.
In 1998, Amazon started selling CDs, videos, and DVDs, revising its business strategy “to
become the best place to buy, find, and discover any product or service available online” –
the online Wal-Mart. By the late 1990’s, only a short 4 years after launching; Amazon were
leveraging technology to provide superior customer service through:
• e-mail and telephone customer support
• automated order confirmation
• online tracking and shipping information
• “1-Click” express shopping - the ability to pay for purchases with a single click of the
mouse using credit card and personal information a customer had provided during a
previous purchase
Amazon were blazing-a-trail; not just making internet history but writing the rules of how to
create and scale an online business. By 2004 it hit $4 billion in online revenues, and by 2006
exceeded its sales guidance estimates $10 billion in revenue. (Laudon. K.C. et al. 2007). It has
in fact out-performed any other retailer and grown to become one of the largest internet retailers
on the planet.
The real significance of the success: is Amazon’s continuous innovation in business strategy
and information systems. Not only in leading the online retail industry, but also understanding
data to gain the trust of the consumer. Amazon built its business by being brave and remaining
true to its vision for providing goods and services to consumers, at competitive prices via an
online channel. This approach has allowed Amazon to push the boundaries of technology, not
just accepting that technology exists, but identifying how to utilise it in every step of the
consumer journey and purchasing cycle.
To better understand the elements of success, we can explore the business through the
lenses of the competitive forces, and the value chain models.
The five forces model was developed by Michael E Porter in 1979 and can be used to analyze
the level of competition and the forces that are affecting competition in the industry.
According to Porter’s five forces model, five competitive forces determine industry
profitability: bargaining power of suppliers, bargaining power of customers, the threats of
substitutes, the threats of new entrants and rivalry among existing firms (Kroenke. D. 2007).
Bargaining power of Amazon suppliers: Amazon always has the upper hand on its supply
chain. Suppliers must follow the defined rules, and comply with the specified code of conduct.
Amazon has been able to create a positive working relationship with its suppliers, albeit one of
“do as I say”, so that suppliers have a minimal impact, or effect on their business activities.
Essentially, Amazon can easily switch, or find new suppliers.
Bargaining power of Amazon buyers: Each customer has enough information when searching
for products online and can make choices based on product descriptions, or customers’ reviews.
The customer’s loyalty remains very important for the online retailer.
The threat of substitute products: By displaying various brands, designers and fashion names,
makes it so easy for customers to jump between products, review feedbacks and compare prices
to decide on their purchase.
The threat of new entrants: Amazon is not the only player in the game. We have e-Bay,
Alibaba online; and other traditional retail competitors. The growth of digital technology has
reduced barriers to entry. However, building a brand like Amazon is the real challenge. It
requires strong leadership, time, money and huge effort to challenge Amazon’s status.
Rivalry in the industry: As mentioned before, Amazon is not the only name in the market.
Due to this, I would say that competition is healthy.
An alternative lens is that of Value Chain. “Value chain analysis is an analytical framework
that assists in identifying business activities that can create value and competitive advantage to
the business” (Dudovskiy, J. 2018).
Amazon Inbound logistics: Amazon is fully responsible for its logistics; customer service,
products, prices, return and refund policies. They established an efficient, professional
infrastructure for the business.
Amazon Operations: Amazon operations are organized into three segments: North America,
International, Amazon Web Services (AWS).
Amazon Outbound logistics: Traditionally, Amazon relied on the services of day-to-day
delivery companies such as UPS, FedEx, and TNT. However, the company has invested in its
own air delivery business, Amazon Prime Air (drone delivery system) and Amazon Flex – intrametropolitan delivery services based on the gig-economy. (Dudovskiy. J. 2018).
Amazon Marketing and Sales: Amazon offers a diverse variety of products, based on best
sellers, price or quality. Overnight, and next day delivery, are available. More recently launched
a same-day premium service. A return policy makes it even more convenient for customers.
Amazon Services: Exceptional customer service is a significant feature for Amazon and one of
the main reasons for being among the top in the market.
Technology and Innovation: Amazon has invested in different areas of technology, like
advanced customer databases and analytics tools for recommendation and personalisation,
scalable Amazon Web Services for Amazon.com’s technology infrastructure, fully optimised as
well as automated warehouses and distribution centers along with robotics technology,
advanced delivery with drones, voice shopping with Alexa AI and Echo devices, augmented
reality to see how products fit and test how they look.
In addition, another approach to view the success of Amazon is that of the 5P’s of the
marketing mix, it is one of the oldest yet more robust marketing theories that combines:
Product, Price, Place, Promotion, and Profit.
Product: Amazon has a diverse product offering across a range of categories, from literature,
music and movies to online groceries, cloud computing, and film/TV services.
Price: Amazon offers affordable prices through its overall pricing strategy, combining: cost
leadership, penetration pricing, price skimming, psychological pricing, product line pricing, and
geographical pricing strategies, coupled with many promotional discounts.
(www.mindtools.com).
Place: Amazon operates online, which makes it accessible for shoppers across many
geographical locations. They also ensure that deliveries are made efficiently, and often free for
with specific purchases.
Promotion: Amazon takes pride in its logo type, with the positive curved arrow from “a” to
“z”, also acting as a smile in bright orange. Amazon leverages various traditional media such as
print, sales promotion, public relations, and direct marketing, as well as online marketing and
social media; displaying a consistent message about its products and services, ensuring the
brand is never confused and always recognized.
Profit: Amazon is aggressively expanding and diversifying its products and services, while
ensuring that they are affordable and meet the needs of its customers. As Amazon continues to
scale and grow, there will be a need for more analytics to identify the key cost drivers and
maintain customer satisfaction. This will require innovative information systems to draw
insights from data and in turn drive down cost and increase profitability.
Amazon can not sit back on its laurels. It has acknowledged it must support the consumers
desire for more convenient ways to shop and continuously test new concepts.
When most traditional bricks-and-mortar businesses where scrambling for “online traction”,
their legacy systems held them back; and they merely dipped-their-toes into the online world,
never really causing any concern or threat to Amazon.
However, with reverse about to take place, many traditional High Street retailers are watching
with caution as Amazon is now disrupting the High Street, with “Amazon Go”. Creating a
seamless online to off-line shopping experience with cashless environments; to the point there
are no check-out kiosks, or cash-desks. Consumers are identified in store by facial recognition,
retina scans or finger prints that are linked to their unique online accounts; allowing consumers
to place an order for an item and simply collect it from a High Street store without any human
intervention.
Amazon is unquestionably a global e-commerce leader and has invested heavily in its
infrastructure, services and products. Amazon also continues its strategy for utilising drones as
delivery vehicles and diversifying its services by developing its Video and Music Prime
services.
Yes, Amazon can continue to be successful. As long as the consumers appetite to shop online
remains strong, and Amazon remains relevant to the consumer lifestyles, then they will
maintain a sustainable competitive advantage.
…
References and Online resources:
Fleerackers. T. (2010). Case: Amazon.com.
Retrieved 23rd May 2016. From https://flatworldbusiness.wordpress.com/flateducation/
intensify/creating-a-flat-business/case-amazon-com/
Laudon. K. C. & Laudon. J. P. (2007). Information Systems, Organizations, and Strategy.
Management Information Systems: Managing the Digital Firm 10th ed. Upper Saddle River,
NJ: Prentice Hall.
Kroenke. D. (2007). Organizational Strategy, Information Systems, and Competitive
Advantage. Experiencing MIS. Upper Saddle River, NJ: Prentice Hall.
Dudovskiy. J. (2018). Amazon Value Chain Analysis.
Retrieved 16th December 2018. From https://research-methodology.net/amazon-value-chainanalysis/
The Marketing Mix and the 4Ps of Marketing: Understanding How to Position Your Market
Offering. Retrieved from https://www.mindtools.com/pages/article/newSTR_94.htm
…
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