NIILM Center for Management Studies 2009-11
Rajesh Kumar Singh
Roll No 29084
Production and Operation Management Assignment
Question: Discuss operations strategies of three companies.
Answer:
Operational Strategy: Amazon.com
Introduction: Amazon.com has become the largest customer friendly online retailer and provides one click purchase facility to its wide range of products including books, music, toys, gifts, electronics etc. For 2011 Amazon’s net sales documented the value of $48077 million to earn net income of $631 million (Annual Report, 2011). Currently, Amazon is serving more than 137 million of its customers with its 56200 employees all over the world. Moreover, International traffic also ranks Amazon at 16th
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This indicates that high activity will lead to low fixed cost per unit cost that Amazon can use to settle for low prices. So, this mass customization will also lead to high productivity that ultimately will optimize profits through decreased fixed cost per unit. Moreover, Amazon also reduces its costs through cross docking shipments. For instance Amazon place its different items like books, toys, electronic etc simultaneously in single order to the closest warehouse located near to customers. To do so, Amazon uses its “12 technologies” to optimize solutions and to predict demand.
3. Customer Fulfillment Network (CFN) Strategy: On the other hand Amazon has also adopted the customer fulfillment networking (CFN) strategy that emphasize to augment gross profit margins through purchasing books directly from publishers rather than involving distributors who add their profits. CFN strategy was developed to integrate customer relationship management and order fulfills management applications. CFN system compares customers’ demand with their capabilities to recognize that whether Amazon can fulfill their orders with reasonable profits or not. It also allows predicting dynamic demand that ultimately reduces the carrying cost and transportation cost at Amazon warehouse. Moreover, it also allows improving their cash flow as less cash is tired up in inventory and increase inventory turnover that ultimately augments firm’s profits.
4. Customer Centric Strategies: One can also
Amazon.com operates in the Online Retail Industry. The sector is one of the fastest growing globally and is outperforming the ordinary retail marketplace. It was created after 1995 and it was only the Internet that made it possible for such an industry not only to be established but to become one of the most flourishing sectors in the business environment. What is interesting is that Amazon.com, together with eBay is the pioneer in the field. Both companies were launched in 1995 and are still extremely successful. The creation of e-mail in 1996 had a huge impact on the development of online retail by introducing a fast and easy way to communicate with customers. For this two-year period Internet usage
As of January 2010, Amazon.com has three times the Internet sales revenue of the runner up, Staples. By offering a large amount of varied categories through its website and other international ones (Amazon.co.uk, Amazon.co.fr, and so on), it has managed to grow to a customer based company with over 30 million people. In addition, the online retail format enables the company to reduce costs of managing inventory (Amazon.com; online bookstore, 2008).
Amazon.com Inc. was initiated by Jeff Bezos in 1994 after realizing the rapid rate at which the internet and websites were growing in popularity among business organizations and individuals. In 1995, the company started operating its website for selling books, videos, compact discs, computer software and computer hardware before being incorporated in1996 as an e-commerce company (Reuters, 2015). Apparently, the company offers may products and services for sale; these products include merchandise for resale products offered by third parties. In this regard the
Amazon is the world’s largest online retailer that was launched in 1995 (Rouse, 2014). Amazon was mainly a book selling company that has enlarged its’ business by selling a variety of goods. The company sells all types of technology devices such as cell phones, games, televisions, movies, cameras, computers,
‘We believe that the principal competitive factors in our retail businesses include selection, price, and convenience, including fast and reliable fulfilment. Additional competitive factors for our seller and enterprise services include the quality, speed, and reliability of our services and tools, as well as customers’ ability and willingness to change business practices’ (Amazon10-K report 2015).
An effective supply chain strategy makes the company is able to respond high level of responsiveness. Amazon balances between cost of distributions
Organizations like Amazon store realized that attaining long-term customer value through delivery of quality services is the key to their existence. Also, be alert to the customer’s needs and wants, because having a loyal base of satisfied customer brings relevant performance indicators. For example, increase in sales improved profits, and possible higher market share (Shamma & Hassan, 2013).
The company has many strengths. First, Amazon is the world’s leading online retailer. According to the 2016 Annual Report, Amazon had total net sales of US $135, 987 million in 2016. These total net sales include three segments which are North America, International, and AWS. Second, in comparison to many companies, Amazon has a superior logistics and distribution system, which allows the company to actualize improved customer fulfillment. Third, with its prolonged strategic drive on low-cost, differentiation, and focus, Amazon offers a wide range of product at low prices to customers. Fourth, Amazon enjoys global recognition from its customers. As stated earlier, Amazon built a strong brand in very little time. Finally, the
Amazon’s effective value creation strategy flows from its excellent business model, which inherently allow it to generate high revenues in cash at a low cost structure. The model is capable of high inventory turnover velocity (HITV) as it collects cash before it spends for product and service fulfillment. Its free cash flows are largely driven by three factors: (a) growing operating income (GOI); (b) efficient working capital management (EWCM); and (c) efficient cash capital expenditure management (ECCEM) (Amazon, 2017). In fact, its cash flow from 2014 to 2016 more than doubled (240.32%).
Amazon.com, Inc. is one of the largest multinational, e-commerce enterprise with its headquarter in Seattle, Washington. Amazon, initially started as an online book store. However, over passage of time, the enterprise expanded its business by introducing several other products such as DVDs, CDs. MP3, computer, software, video games, electronics, apparel, furniture, fax and toys. Amazon.com has achieved a high level of customer loyalty and satisfaction by providing personalized Web pages and easy selection of products at low prices. Amazon.com has a large database of customers. It collects information related to the buying habits and the last purchasing experience of customers. Using this formation, it provides
Amazon has grown rapidly since their inception. The company experienced a surge is sales of 313% until 1998, supported by 8.4 million customer accounts in over 150 countries, of
Amazon.com, Inc. (Amazon.com), incorporated on May 28, 1996, is an American electronic commerce company with headquarters in Seattle, Washington and is the largest Internet-based retailer in the United States (Ungar, 2014). Amazon.com started as an online bookstore, but soon diversified, selling DVDs, Blu-rays, CDs, video downloads/ streaming, MP3 downloads/streaming, software, video games, electronics, apparel, furniture, food, toys and jewelry (Ungar, 2014). The company also produces consumer electronics—notably, Amazon Kindle e-book readers, Fire tablets, Fire TV and Fire Phone — and is a major provider of cloud computing services (Ungar, 2014).
The unmatched economies of scale at Amazon offer huge cost effciencies through a combination of high-volume, low cost
With the proliferation of communication and information technology, particularly the Internet, most business organizations have been at the forefront to join the e-commerce platform. Amazon is considered as one of the existing and largest e-business platform in the world. This report outlines Amazon’s strategic intent and key resources and capabilities. In addition, the report will also include an analysis of the company 's assets and capabilities that have provided it a sustainable competitive edge as well as, the recommended future strategy of the giant online organization. Amazon defines its line of business operations based on product and service sales, fulfillment, digital content subscriptions, publishing, and co-branded cards. The company 's line of business is defined as an online store, Internet service provision, and the Kindle ecosystem. This project will explore the truth that has made the online company to be considered as the top online retailer, which mainly focuses on strategy. This report also outlines how inventories play a fundamental role in the organization 's business or corporate strategy. The other issues covered in the report include the approach used by the online company deal with the supply chain and the reason behind fast shipping fast. The paper will outline the finance statute of the company and whether the finance effect will bar the organization from developing in future. In order to achieve the answer to the questions
Dell Inc., which is headquartered in Texas, was founded by Michael Dell in the year 1984, and the company’s strategy when it came to distributing differed from other competitors in the computing industry due to the fact it did business with its customers directly versus using middlemen such as retailers or and wholesalers. This afforded Dell’s customers the ability to have computers built to their specification as they order them, and kept the company’s costs at low levels. The company’s website brought in one million dollars on its own in 1997. The company decided to expand globally and created new products to reach four specific target markets, which it competitors such as Hewlett- Packard, Apple and others followed suit by using