amazon knowledge management case study

Roger Swannell

Case study on Amazon’s approach to innovation and competition in the knowledge economy

Roger on 13/03/2020

Introduction

Amazon is generally regarded as one of the most innovative companies in the world (Reed, 2017). In considering how Amazon approaches innovation within the knowledge economy we’ll frame the analysis of new technologies by looking at McKinsey’s research on disruptive technologies that have potential for economic impact, how Amazon has approached innovation in each of these new technologies, and consider how innovation has impacted Amazon’s revenue growth.

Amazon’s approach to innovation

Since beginning in 1995 as an online bookstore Amazon has expanded into ecommerce marketplace, digital advertising, cloud computing, groceries and apparel, and artificial intelligence industries. Amazon’s investment strategy for innovation is to act like a growth investor, spreading it’s investments across a diverse range of sectors and industries. This is a markedly different strategy to other tech giants who choose to focus the majority of their innovation efforts within their core competencies e.g. Facebook with social networks and Apple with consumer electronic devices (Bowman, 2017).

Jeff Bezo, CEO of Amazon, explains, “Because of our emphasis on the long-term, we may make decisions and weigh tradeoffs differently than some companies… We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations” (Bezos, 1997). It is through this approach to innovation that Amazon seeks to develop monopolies in all of the sectors that it enters.

McKinsey Global Institute’s report (Fig. 1) on disruptive technologies identifies “12 technologies that could drive truly massive economic transformations and disruptions in the coming years” (Manyika et al, 2013). Amazon is publicly investing in at least eight of the twelve technologies, through investing in companies that are working on new technologies, utilising the new technology to build organisational capacity and improve productivity, and through commercialising the new technologies in ways that enable Amazon’s business customers to implement within their companies.

Amazon is known for its secrecy around innovation, necessarily so in order to protect its trade secrets, but by looking at how Amazon approaches the six most impactful disruptive technologies we can gain an understanding of how Amazon approaches innovation.

Mobile Internet

“Increasingly inexpensive and capable mobile computing devices and Internet connectivity”

Amazon’s Kindle eReader, which launched in 2007, wasn’t the first eReader on the market but with it’s innovative WiFi hardware and Kindle Direct Publishing, the self-publishing platform, it enabled customers to have thousands of books available within seconds and authors to publish their writing without relying on the publishing industry (Fox Rubin, 2017). Whilst the design of the device was very similar to other eReaders, it was Amazon’s move to create its own ebook format and the Kindle Direct Publishing Network to allow ebooks to be published in its own format that fits with Amazon’s approach to innovation.

Whilst the majority of manufacturers were focused on developing eReader devices that could support .epub as the main format for ebooks, Amazon was instead establishing a core competency around its own format and publishing network. Developing the device was a complementary competency for Amazon, although one important enough for Amazon to ensure it controlled the device as part of the value chain for ebooks.

The digitization of books was a technological breakthrough which following Anderson and Tuishman’s evolutionary model of technological change, resulted in lots of technical variation in the formats available. Over the first decade the variations in formats reduced until the current situation of having two formats, epub and Amazon KIndle format, available. The ebook market hasn’t yet arrived at a single dominant design (Anderson & Tushman, 1990. Suárez & Utterback, 1995) however as Amazon currently dominates the eReader market with 60% of worldwide device sales in 2017 (Fox Rubin, 2017), only time will tell if the Amazon format for ebooks becomes the dominant design.

Automation of knowledge work

“Intelligent software systems that can perform knowledge-work tasks”

In 2018 Amazon “reorganised around Artificial Intelligence” (Morgan, 2018). This reorganisation focused other teams and departments at Amazon to utilise AI in their products and services, including warehouse management, recommendations on Amazon Music, Prime Video and on the ecommerce marketplace, Alexa and the Amazon Go store (Levy, 2018). This demonstrates Amazon’s approach to automating knowledge work. AI isn’t considered a single product that remains within a single team, it is a technology and capability that Amazon clearly regards as a core competency that should be utilised in as many ways as possible in order to give Amazon a competitive advantage in all of the sectors it operates in.

This is an example of what Tushman and Anderson explain when they say, “Technological innovation affects not only a given population, but also those populations within technologically interdependent communities” (Tushman & Anderson, 1986). Amazon leveraged the technological innovation of AI to gain benefits across all areas of its business, however it remains unclear whether this new technology was a competence-destroying because it required completely different skills and knowledge to operate or competence-enhancing because it built “on existing know how yet did not render skills obsolete” (Tushman and Anderson 1986).

Having realised the benefits Amazon went on to commercialise it’s AI by creating AutoGluon, a service that enables developers to build applications involving machine learning on top of AWS (Hepburn, 2020). “Commercial AI has enjoyed what we at Amazon call the flywheel effect: customer interactions with AI systems generate data; with more data, machine learning algorithms perform better, which leads to better customer experiences; better customer experiences drive more usage and engagement, which in turn generate more data.” (Sarikaya, 2019).

Internet of Things

“Networks of low-cost sensors and actuators for data collection, monitoring, decision making, and process optimisation”

The Amazon Dash, an internet-enabled button for making repeat purchases, was Amazon’s move into Internet of Things devices. On sale for less than four years the device fell foul of consumer protection laws in Germany, Amazon’s second biggest market at the time, where a court ruled that Amazon Dash didn’t provide customers with enough information to make informed purchases (Jagannathan, 2019). Although a regulatory and revenue-generating failure, the device may have been more of a success in establishing Amazon’s first-mover advantage into the market of consumer IoT devices and in collecting data on buying behaviour (Newman, 2016) to inform the next generation of devices.

Echo and Dot, the home speakers with the Alexa voice technology, soon replaced the Dash as a means of making purchases easier for consumers and as a means of collecting data on buying behaviour, data which could also be used to train the machine learning algorithms that powered Alexa. Voice-powered machine learning algorithms are intangible assets that require investment but have different economic characteristics to tangible assets (Haskell & Westlake, 2017):

• Sunk costs – represent an investment that is unlikely to deliver a return in the way a tangible asset would if resold as intangible assets are difficult to sell as they are often bespoke to the company developing them, as in the case of Alexa algorithms.
• Spillovers – are benefits competitors may gain from appropriating intangible assets such as the design of a device which is easy to reverse engineer. Amazon’s defense is to focus more on things that are difficult to copy such as bespoke algorithms.
• Scalability – a characteristic of an intangible asset that can be leveraged in ways that tangible assets cannot without increased investment, such as the Alexa algorithm which works on all Alexa powered devices, but also the ‘brand’ of Alexa as a likeable, humanised, ‘part of the family’ voice assistant in comparison to Google choice to call its voice assistant Google.
• Synergies – occur when intangible assets become more valuable together than in isolation. Alexa has more value because it connects to Amazon’s ecommerce systems and allows customers to make purchases, and because Amazon allows developers to build other services on top of the Amazon ecosystem that enables customers to control the heating and lighting in their homes.

Amazon’s approach to investing more in its intangible assets, such as algorithms, than in the physical devices seems to suggest that they recognise the competitive advantage intangible assets can give them a over other companies, but also that they recognise the risks Haskell and Westlake point out can be associated with this kind of investment (Haskell & Westlake, 2017). The economic value of intangible assets in the case of Alexa comes from strategic choices about how they are leveraged to drive purchasing behaviour in customers.

“Use of computer hardware and software resources to deliver services of the Internet ”

Amazon Web Services is a leading (Gartner, 2018) infrastructure-as-a-service provider. Gartner calls out AWS’ “prioritisation of being first to market” along with being the “most mature enterprise-ready provider, with the strongest track record of customer success” as key aspects of being a leading cloud provider (Bala, et al, 2018). AWS started from the needs of Amazon’s ecommerce business, which required reliable, scalable technology to power its growth in the early 2000’s. By 2003, providing infrastructure services and reliable, scalable data-centers was considered a core competency by Bezos and Amazon senior executives. When Amazon launched AWS in 2006 they were “first to market with a modern cloud infrastructure” (Miller, 2016). AWS holds 40% of the market share in cloud computing (Carey, 2019), a position it gained by building on core competencies it owned in other areas of its business and being years ahead of competitors (Miller, 2016).

Teece talks about the ‘perplexing’ problem of how many companies who are first to market with an innovation are not the ones to commercialise and profit from it. With AWS, Amazon demonstrated that it’s approach to innovation can deliver on significant commercial success. Teece’s framework for determining which company will win from introducing innovation involves understanding the appropriability; the environmental factors that affect the ability to capture profits from an innovation, the design phase; whether a dominant design has emerged, and the competencies necessary for the commercialisation of the innovation.

In the early 2000s, cloud infrastructure services had what Teece describes as a “tight appropriability regime” (Teece, 1986). The environments in which the technology for providing infrastructure services over the internet existed was easy to protect simply because competitors were not yet building their core competencies in cloud. Having a “tight appropriability regime” for cloud services gave AWS the time it needed to launch its products and services before the regime weakened and other entrants could imitate the technology.

At the time of launching AWS, cloud infrastructure services were pre-paradigmatic, the majority of infrastructure providers weren’t even considering cloud, so there was no dominant design. Teece says that, “when imitation is possible and occurs coupled with design modification before the emergence of a dominant design, followers have a good chance of having their modified product anointed as the industry standard, often to the great disadvantage of the innovator.” (Teece, 1986), but this did not happen to Amazon.

Amazon already owned the complementary assets required to commercialise AWS successfully (procurement, marketing, sales, etc.) which removed any bargaining power issues that may have arisen from contracting assets, and put AWS in a good position to quickly establish the dominant design for cloud infrastructure services and so leverage its position as a first-to-market pre-paradigmatic innovator and as a paradigmatic market leader.

Advanced robotics

“Increasingly capable robots with enhanced sensors, dexterity, and intelligence; used to automate many tasks”

In 2012, Amazon acquired Kiva Systems, a small robotics company for $775 million providing Amazon with mobile robots and the technical expertise to begin automating its warehouses and sorting facilities. (Del Rey, 2019). This automation of the work of pickers and packers enabled Amazon to increase efficiency in its warehouse operations by reducing the time taken to pick items for delivery to its customers (Simon, 2019), and so driving the success of its ecommerce business. In 2019 Amazon introduced machines to automate putting customer orders into boxes ready for delivery, a job that was previously performed by thousands of workers. It “would amount to more than 1,300 cuts across 55 U.S. fulfillment centers for standard-sized inventory. Amazon would expect to recover the costs in under two years, at $1 million per machine plus operational expenses.”, reported Reuters (Dastin, 2019). Amazon currently has more than 200,000 mobile robots working inside its warehouse network, alongside hundreds of thousands of human workers.

Amazon, as a low margin business, seeks to organise its supply chain more effectively than its competitors to maximise profits (Teece, 1986). Automation increasingly allows for this in Amazon’s fulfilment business as it replaces the routine work (Autor, Levy & Murnane, 2003) of pickers and packers. In making capital investments in technologies to replace workers with robots Amazon could be said to be taking a skills-biased approach; that is, that it favours more highly skilled workers such as programmers, engineers and mechanics at the cost of lower skilled workers and assumes thats increased productivity for the company comes from fewer highly skilled workers over more lower skilled workers. Ordinarily we would expect that companies would make decisions about how much to invest in automation technologies by considering economic factors such as the cost of labour in a particular geographic market however, from what we’ve seen of Amazon’s investment strategy in innovation it seems more likely that Amazon is playing the long game with automation and betting on machines being capable of performing non-routine cognitive and manual tasks in the future (Frey & Osborne 2013) and so replacing lower skilled workers completely.

The adoption of automation in warehouses and fulfilment centres has been congruent with Amazon’s approach to innovation involving massive investment in technology that provides increased internal capabilities enabling Amazon to become a market leader and then selling that capability to businesses to deliver long term revenue gains. The question of whether robots will replace workers, at least in Amazon warehouses, seems to have an inevitable answer.

Autonomous or near-autonomous vehicles

“Vehicles that can navigate and operate autonomously or semi autonomously in many situations”

Amazon has invested $700 million in Rivian, the electric vehicle manufacturer and $530 million in Aurora, an autonomous driving startup. “For Amazon, this small investment is a good way to enlarge their bet on the E.V. [electric vehicle] market without having to tool up a plant to find out if it will fly. Over time, the Rivian investment could give Amazon a starting point to own and operate an in-house package delivery business.” (Mitchell, 2019).

Amazon has been developing delivery drones “that can fly up to 15 miles and deliver packages under five pounds to customers in less than 30 minutes.” (Vincent, 2019). Developing delivery drones and getting FAA approval might be considered a big enough innovation for most companies, but Amazon goes a huge step further by developing its own Air Traffic Control System for drones. “The system also gives aviation authorities, like the FAA, the ability to track the drones in the airspace to ensure safety and create “no fly zones” in times of emergency. The traffic management system is easy to use for various operators in the same airspace because it will connect via the internet” (Amazon, 2019). In a similar strategic play to the Kindle, Amazon realises that controlling the platform that controls the devices creates considerable more competitive advantage than simply developing the best drones.

Developing drones and autonomous electric vehicles will reduce Amazon’s reliance on third-party delivery partners and own the supply chain (Prosser, 2019), and conceivably it could commercialise the service to compete with FedEx, UPS, etc., and thus drive increased revenue for the company, but in order to do so it needs to protect the design of the drones and vehicles from competitors. Archibugi & Pianta explain that, “technological change impinges on codified and tacit knowledge… innovations can either be embodied in capital goods and products or disembodied, i.e. the know-how included in patents” (Archibugi & Pianta, 1996). As it is almost impossible to protect designs for publicly available machines like drones through trade secrets in the way Amazon does for its software and algorithms, Amazon needs to file patents to protect its disembodied codified knowledge in order to continue to be innovative.

In 2019 Amazon filed over two thousand patents (Capriel, 2019) many for drones and autonomous vehicles, and since 2010 Amazon has grown its patent portfolio from less than 1,000 active patents in 2010 to nearly 10,000 in 2019 (Columbus, 2019), a ten-fold increase in less than a decade (Fig. 2).

Patents can be used strategically by companies in a number of ways; to protect inventions with the intention of commercialising them, or simply to prevent competitors from entering the space. This makes the number of patents filed a poor indicator of innovation, and so it seems that the number of patents Amazon has filed has increased over time because they have become involved in more sectors and industries rather than because they have become more innovative.

Amazon’s sources of competitive advantage

These six examples demonstrate Amazon’s superior ability over its competitors and how they employ the same approach towards innovation; not constrained to sectors or industries that they have previously operated in, investing huge amounts to own the sector they move into, building core competencies in their value chain to protect their own competitiveness, and making new technologies available outside their own ecosystem to allow their customers to leverage the technology in ways that support and scale Amazon’s business model, in many cases the customer becoming reliant on Amazon in their value chain, for example Netflix using AWS (Uenlue, 2018).

Amazon’s economic growth from innovation

Amazon’s approach to innovating across multiple sectors and industries has given them significant competitive advantage and commercial success, growing from $6.92 billion in 2004 to $280.52 bn in 2019 (Clement, 2020), an almost 4000% increase.

The breakdown of Amazon’s commercial performance by it’s main areas of business in 2018 shows it’s longstanding ecommerce business as the main revenue producing business (Day & Gu, 2019):

• Ecommerce: $234.61 bn sales
• Cloud computing: $25.6 bn in revenue
• Groceries: $25.4 bn in sales
• Online apparel: $24.61 bn in sales
• Consumables: $23.6 bn in sales
• Digital advertising: $7.4 bn in revenue

Of the six disruptive innovations discussed above, only cloud computing, where Amazon is the market leader, generates significant income. This reflects Amazon’s approach to innovation involving long-term investment to establish commercial success.

Amazon has earned its reputation as one of the most innovative companies in the world. Amazon’s approach innovation can be broadly summed up in three parts:

• Large investments and acquisitions in software and hardware startups spread across multiple sectors and industries. This puts Amazon in control of the value chain and reduces the risk of suppliers holding strong bargaining positions.
• Use the technology that is produced to develop efficiency and productivity gains in products and services in a diverse range of sectors and ensure competitive advantage over the long term.
• Commercialise those products and services, allowing other companies to leverage them, generating revenue and creating lock-in network effects (Katz & Shapiro, 1994) for those companies and Amazon’s customers.

This approach to innovation has enabled Amazon to develop significantly successful businesses in ecommerce, cloud computing, digital advertising and retail, and is likely to contribute to Amazon’s continued success into the future.

Reed, N. 2017. Why Amazon Is The World’s Most Innovative Company Of 2017. Fast Company.

Bowman, J. 2017. Amazon’s Strategy Is a Perfect Example for Growth Investors. The Motley Fool.

Bezos, J. 1997. Letter to Shareholders. US Securities and Exchange Commission.

Manyika, J., Chui, M., Bughin, J., Dobbs, R., Bisson, P., and Marrs, A. 2013. Disruptive technologies: Advances that will transform life, business, and the global economy. McKinsey Global Institute.

Anderson, P. & Tushman, M. 1990. Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly.

Suárez, F. F. and Utterback, J. M.. 1995. Dominant Designs and the Survival of Firms. Strategic Management Journal, Vol. 16, No. 6 (Sep., 1995), pp. 415-430. Wiley

Fox Rubin, B. 2017. 2 big innovations that made Amazon’s Kindle a success. CNET.

Morgan, B. 2018. How Amazon Has Reorganized Around Artificial Intelligence And Machine Learning. Forbes Media LLC.

Levy, S. 1990. Inside Amazon’s Artificial Intelligence Flywheel. Wired.com .

Tushman, M. L., & Anderson, P. 1986. Technological Discontinuities and Organizational Environments Administrative Science Quarterly, Vol. 31, No. 3. (Sep., 1986), pp. 439-465.

Hepburn, M. 2020. Amazon’s AutoGluon helps developers deploy deep learning models with just a few lines of code. Amazon.

Sarikaya, M. 2019. How Alexa Learns. Scientific American.

Jagannathan, M. 2019. Amazon’s Dash buttons may be gone, but it’s getting even easier to spend your money. Market Watch.

Newman, J. 2016. The Secret Power Of Amazon’s Dash Buttons: Not Sales, But Data. Fast Company.

Haskel, J. and Stian Westlake, S. 2017. Capitalism without Capital: The Rise of the Intangible Economy. Princeton University Press.

Bala, R.,Gill, B.,Smith, D. and Wright, D. 2019. Magic Quadrant for Cloud Infrastructure as a Service, Worldwide. Garnet, Inc.

Miller, R. 2016. How AWS Came To Be. Techcrunch.

Carey, S. 2019. The history of AWS: A timeline of defining moments from 2002 to now. Computerworld. IDG Network.

Teece, D. (1986) Profiting from Technological Innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15, pp. 285-305.

Del Ray, D. 2019. How robots are transforming Amazon warehouse jobs — for better and worse. Vox.

Simon, M. 2019. Inside the Amazon Warehouse Where Humans and Machines Become One. Wired.

Dastin, J. 2019. Amazon rolls out machines that pack orders and replace jobs. Reuters.

Autor, D. H., Levy, F. & Murnane, R. J. 2013. The Skill Content of Recent Technological Change: An Empirical Exploration. The Quarterly Journal of Economics, Volume 118, Issue 4, November 2003, Pages 1279–1333.

Frey, C. B. & Michael A. Osborne, M. A. 2013. The Future Of Employment: How Susceptible Are Jobs To Computerisation? Oxford Martin School, University of Oxford, Oxford.

Mitchell, O. 2019. Amazon keeps on truckin’ with autonomous vehicle investments. The Robot Report.

Vincent, J. 2019. Here’s Amazon’s new transforming Prime Air delivery drone. The Verge.

Amazon Day One Staff, 2019. Another new frontier for Prime Air. blog.aboutamazon.com .

Prosser, M. 2019. Where Is Amazon Headed With Its Self-Driving Car Initiatives? Singularity Hub.

Archibugi , D. & Pianta, M. 1996. Measuring technological change through patents and innovation surveys. Institute for Studies on Scientific Research, National Research Council, Via Cesare De Lollis 12, 00185 Rome, Italy.

Capriel, J. 2019. The most interesting Amazon patents of 2019: From drones that follow you home to virtual reality noses. Washington Business Journal.

Columbus, L. 2019. 10 Charts That Will Change Your Perspective Of Amazon’s Patent Growth. Forbes.

Uenlue, M. 2018. Amazon Business Model: Amazon Web Services. Innovation Tactics.

Clement, J. 2020. Annual net sales of Amazon 2004-2019. Statista.

Day, M. & Gu, J. 2019. The Enormous Numbers Behind Amazon’s Market Reach. Bloomberg.

Katz, M. L. & Shapiro, C. 1994. Systems Competition and Network Effects. Journal of Economic Perspectives. Vol. 8, No. 2, Spring 1994. (pp. 93-115).

• Category: Blog

Report on Knowledge Management at Amazon Inc

1.0 executive summary.

The report explores Amazon’s approaches to knowledge management and provides recommendations that can help improve operations within the organization. Knowledge management approaches adopted by company impact operations in a significant manner. For instance, profitability in a company is affected by knowledge and skills that is available within an organization. First, the paper explores an internal analysis on knowledge management approaches in a bid to ascertain how effective they are in promoting efficiency. Second, the report captures external knowledge analysis of the company’s approaches to KM. Equally, the paper gives recommendations that are necessary for Amazon to improve its operations within the industry. The giant tech company is a suitable case for this study and there is a need to utilize existing literature for a deeper understating of the same. The report is a development that can help promote and change the scope of operations for the giant tech company in a significant manner.

2.0 Introduction

Amazon Inc. is one of the largest tech companies in the world that have gained popularity in the last few years. The e-commerce sector has emerged to attract interest from many people and investors in the world to a large extent (Hislop, Bosua and Helms, 2018). The US based company specializes in e-commerce, cloud computing, digital streaming and artificial intelligence. It is important to note that approaches to knowledge management at any organization have a significant impact on operations. The report aims to explore Amazon’s strategic approaches to knowledge management as one of the most influential aspects to effective and efficient business operations. Examining knowledge management requires one to explore both internal and external strategies that are in place (Maital and Seshadri, 2012). Amazon is a large company with links to other organizations and examining how it manages information, data and content will be helpful towards gaining a deeper understanding on the topic of discussion (Alavi and Leidner, 2001). An examination on existing literature and company reports can be helpful in increasing the scope of knowledge on factors that influence business success in a specific industry (Ahmed and Shepherd, 2010). It is important to highlight that Amazon operates in an industry that is reliant in technology and examining knowledge management will be useful towards informing practice.

3.0 Amazon Inc. Overview

Amazon Inc. is well known for its strategic approach towards handling of business in the 21 st  century. It is important to examine its mission statement and values to determine whether they align with set objectives (Mathew and Varia, 2014). For instance, its mission statement is based on customer obsession and does not focus on competitors. The company aims to become the most customer-centric company in the industry in a bid to gain a competitive advantage (Easterby-Smith and Lyles, 2011). Both the mission and vision statement at the company align with its strategy, which is to become a valuable company in society. An examination on company values at Amazon indicates that customer obsession is the first priority during its operations (Majed, Nuraddin and Hama, 2018). The giant tech company purposes on inventing new products and simplifying services for people in a manner that promotes its purpose. It is the duty of the management at Amazon Inc. to ensure that the right strategies are put in place to met set standards and goals within the consumer market. The organization has utilized technology in a manner that has helped it gain more customer base and rise to the top in the industry (Maital and Seshadri, 2012). The fact that the company meets its objectives through strategic knowledge management has made it more popular in the recent past.

The application of artificial intelligence in its business operations has had a big impact on the market in a significant manner (Ahmed and Shepherd, 2010). Technological interventions have been pillars to strategic planning and execution of various tasks. Amazon manages its employees well in a manner that helps improve loyalty and service delivery. The fact that the company has developed an online platform that has promoted online shopping through the internet is an indication of its commitment towards meeting set goals and objectives in the market (Vakulenko et al., 2019). It is important to note that the company has automated many processes including hiring and firing of employees. Such aspects in operations play an important role in shaping organizational culture and structure. The company has done well to educate its employees in a bid to improve their customer handling skills. For instance, employees’ welfare must be taken 9nto account as it affects the output of an individual (Hislop, Bosua and Helms, 2018). Much should be done by the tech company in utilizing knowledge and resources as key prerequisites for business success in the market. Company values, mission, and vision statements are aligned to strategies in place in a bid to achieve set objectives regarding business ambitions.

4.0 Internal Knowledge Management at Amazon

The SECI model can be applied to explain the approaches that the company uses in the market in regards to knowledge management at the company. It is crucial to explores the scope of the model and establish how conceptual it is in handling knowledge within an organization (Mathew and Varia, 2014). The model constitutes of four common processes that organizations use to manage their knowledge. The first step is socialization that involves sharing of tacit knowledge through practice, observation, imitation, and participation in informal and formal processes within n organization. The company has one well in the past to adopt the SECI model that has helped the organization manage its information well. The second aspect of the model is externalization that involves articulating tacit knowledge into explicit concepts (Majed, Nuraddin and Hama, 2018). It is important that an organization devises strategic approaches that can help it externalize information for improved management of such information. The third step is combination where there is a need to integrate information into the knowledge system (Correll et al., 2016). Lastly, the model captures internalization that involves embodying explicit knowledge into tacit knowledge. The model is effective in helping Amazon gather the right information and manage its knowledge well.

4.1 Integrated Methods to Communication

It is important to note that the company has adopted an integrated approach towards communication during its activities. The role of communication in promoting operations and promoting knowledge within an organization such as Amazon cannot be overlooked (Muninger, Hammedi and Mahr, 2019). It is through communication that staff within an organization can communicate and share with each other on matter affecting productivity. Poor communication approaches in an organization is detrimental to efforts of improving on the operations. Conventional approaches to communication were not as efficient as digital methods that can be employed by various organizations. A combination of the two approaches o communication produces the best results for any organization and it is important that Amazon utilizes both approaches (Wiig, 1997). The emergence of smartphones is another boost to the operations of the company as many people can assess information regarding various products in a convenient manner. Internet accessibility from remote location has boosted communication efforts for the company as customers can reach out to the platform without many problems (Maital and Seshadri, 2012). Both conventional and digital approaches to communication at Amazon have proved to be useful in promoting business operations in a significant manner. Failure to incorporate the two approaches to communication might prove detrimental to efforts of administering success within the organization.

Social media platforms have proved to be an important factor in promoting communication approaches employed by Amazon. Most people across the world utilize social media platforms such as Facebook, Twitter, YouTube and Instagram to communicate intentions to customers within various marketing (Onyusheva and Seenalasataporn, 2018). In essence, Amazon utilizes social media to create awareness of the various products they have in place for customers. It is important to note that social media platforms are utilized to run advertisements and other promotions that have boosted company operations in a significant manner. The company has created profiles on various social media platforms that have proved strategic in communicating and reaching out to customers (Quintas, Lefrere and Jones, 1997). Equally, the fact that customers can make inquiries from remote locations in a convenient manner is indicative of strategic approaches that are in place for communication. Amazon has an established online platform with a customizable front page for each client or customer. People can utilize the platform to shop for various products that are sold from remote locations in a convenient manner (Uden et al., 2014). In essence, integrated marketing and communications approach utilized the company has been a pillar in promoting operations and increasing profitability in the market.

4.2 Implementation Strategies

It is vital that the report examines implementation strategies that are applied ensuring that knowledge management is handled in the right manner. The most common approach applied by the company is bottom up where information from grassroots is communicated to higher ranks within the company (Muninger, Hammedi and Mahr, 2019). For instance, a customer can raise a complaint to the management on the quality of service received. Such information is crucial in decision making and correcting mistakes that can cost the company its brand name. It is the duty of management to improve strategies that can increase collection of useful information for decision making in future (Onyusheva and Seenalasataporn, 2018). Knowledge within the organization under the model starts at low levels without much support from the management. The approach is strategic as it addresses issues that are important in shaping operations of an organization (Nisar, Prabhakar and Strakova, 2019). Another approach applied by the company in implementing its strategy is top down where the management asks people within the organization to manage knowledge. Amazon utilizes both models to communication as information collected is essential in decision making (Trott, 2011). In most cases, the top down approach works to ensure that operational objectives are achieved. It is through the right implementation of policies that organizations such as Amazon can manage their knowledge well.

Another important approach that is used by the company to administer knowledge management is through trials and fails in the market. It is vital to highlight that there are programs that the company has rolled before but have failed to make an impact in the market (Onyusheva and Seenalasataporn, 2018). The company comes up with a strategic framework that operates to ensure that trials and pilots are conducted as a way of gathering the right information. The management should be at the forefront of advancing the right practices that can promote implementation of knowledge management approaches. Amazon is a top retailer that should purpose to manage its knowledge well in a bid to improve and increase its profitability within the market. It is important to note information and communication are pillars that should be considered in establishing the right strategy for operation. Designing of a framework that can control aspects of knowledge management implementation can be a step towards gaining ca competitive edge within the market (Dillaway, 2021). In essence, Amazon has managed to handle information and knowledge in a manner that has led to increased operations within the market. More strategic implementation approaches should be used to enhance flow of information in a way that benefits operations for Amazon.

5.0 External Knowledge Analysis at Amazon Inc

Examining external approaches to knowledge handling at the company is an important aspect towards gaining a deeper understanding on the operations of Amazon (De Long and Fahey, 2000). An external analysis examines strategies that are applied in handling knowledge from an outside point of view (Mergel, 2016). For instance, understanding knowledge protection at the company and approaches to sourcing of the same information can prove helpful in increasing the scope of information on the same. Open innovation and knowledge protection are among crucial aspects that the report seeks to explore.

5.1 Open Innovation

Innovation involves the process of coming up with something better than what exists in the market. Amazon has been at the forefront of supporting innovative exercises that have ended up changing the world in one way or the other (Mergel, 2016). For instance, the development of the prime option on the company’s platform has helped customers connect with products from other companies that operate within the industry. Prime guarantees users fast and free shipping for one thousand items, which has helped Amazon build a good brand name. One-click purchases on Amazon website is another development that has made the scope of shopping easier and faster. Other websites might be inappropriate as one would need to fill many forms before making a purchase (Muninger, Hammedi and Mahr, 2019). Equally, development o the dash button by the company has helped many people and made online shopping a whole different experience. It facilitates Amazon’s one-click ordering once initiated, which illustrates how innovation has been utilized externally. External knowledge handling within Amazon has promoted business operations through innovative processes. Cloud computing is another crucial innovative development that Amazon has established in the last few years (Tou et al., 2019). The company built the cloud computing infrastructure to help improve web services but has since started providing the same services to other organizations. In essence, open innovative processes at Amazon have yielded fruit by promoting knowledge handling at the organization.

5.2 Amazon Competitors

It is important for the report to assess Amazon’s competitors and establish how the company handles its knowledge in regards to the same. Amazon competes with a number of competitors in the industry and it has become a leader in online retailing (Trott, 2011). There are different segments in that Amazon operates in the industry to include online stores, physical stores, Third-party seller services, subscription services and Amazon Web Services. Each segment in the market has its competitors who have established platforms. For instance, in online retailing, Amazon competes with established organizations such as Overstock Vip Shop Holdings. The company has done well to maintain a good relationship with its competitors in a bid to promote healthy business (Zennyo, 2020). Cloud computing approach that the company established has helped maintain a record of data on consumers and suppliers. Such information can be useful in designing approaches to promote efficiency and convenience over its competitors. Competition in the industry is high and there is a need to advance it operation and provide improved services to customers (Tou et al., 2019). A high level of competition in the industry has promoted strategic partnerships that see both companies benefit from the same. Amazon has been at the forefront of maintain a good relationship with competitors in a bid to promote profitability and access to knowledge.

5.3 Knowledge Protection

It is important to examine how the company protects its information from getting into unauthorized hands. The company employs encryption that has helped them maintain a good relationship with users and customers (Dillaway, 2021). It is important to highlight that the management at the company adheres to the Payment Card Industry Data Security Standard that helps it when handling credit card data. Loss of credit card data can be detrimental to efforts of a company gaining trust and maintaining its competitive edge. Amazon maintains physical, procedural and electronic safeguards in connection with collection, storage and disclosure of personal information for users (Dixit, Clouse and Turken, 2019). Devices from Amazon are protected from information loss and access from unauthorized individuals. In essence, Amazon uses rigorous processes that have proved strategic towards handling of privacy of information, which is a major concern for many customers across the world. The company has developed both formal and informal networks that work harmoniously to ensure that the company performs well to gain a competitive advantage (Peprah et al., 2021). Equally, the company ensures that customers do not get access to information that does not concern them in any way. Such strategies have been in successful in helping the organization do better in the market.

6.0 Evaluation and Recommendations

The report should focus on conducting an evaluation on strategies that company applies in managing its people and provide the necessary recommendations that should be put in place to improve operations (Peprah et al., 2021). The company communicates with its customers on online platform and provides instant feedback to queries. Examining its strategy to handling of information can inform many of the need to adopt appropriate approaches to promoting efficiency and convenience in business.

6.1 Evaluation

Amazon uses an innovative strategy that has seen it improve it operations in many markets across the world. The development of brick-and-mortar services for customers marked the begging of a new online shopping experience that attracted its competitors (Majed, Nuraddin and Hama, 2018). The innovative strategy that it applies in handling knowledge has led to other developments that have promoted the experience of online shopping. Equally, introduction of free and fast delivery within the first one thousand items on prime has made the company gain more popularity in the market. Another important strategy that Amazon applies in maintaining it knowledge management approaches is integrated methods to communication (Dixit, Clouse and Turken, 2019). The company allows for instant feedback and can help provide suggestions to individuals while shopping online. The innovative strategy has proved fruitful for the company as many developments continue attracting people on a daily basis. In essence, Amazon is an established company that applies a strategic approach of innovation to advance its operations within the market (Peprah et al., 2021). The failure to employ innovation as strategy in any organization might be detrimental to efforts of managing knowledge well within the same firm. Social media platforms should be utilized to advance communication and hence knowledge within a company.

Another important strategy that Amazon uses is its model of business that has since attracted many players in the industry. Online retailing is on the rise recently due to increased use of technology (Vakulenko et al., 2019). The company adopted a strategic approach to conduct business online and reduce costs associated with running of numerous physical stores. Online shopping provides customers with a convenient and appropriate approach that can help reduce time wastage. The fact that most people prefer convenience and efficiency gives Amazon an upper-hand in its business operations. It is also important to note that the company has formed strategic agreements with suppliers and customers in a bid to enhance trust and improve working relationships. The giant tech company has made agreements with several suppliers who sell their products directly on its e-commerce platform (Dixit, Clouse and Turken, 2019). Application of digital technology in promoting business is another strategy that the company has embraced in its operations. The organization can do better and promote operations through proper management of knowledge and other activities in the industry.

6.2 Recommendations

It is vital to derive recommendations that can help Amazon Inc. improve its operations and increase profitability. Proper approaches to knowledge management help in improving skills and ways of increasing profitability within an industry (Majed, Nuraddin and Hama, 2018). Amazon has done in the recent past to employ digital approaches to handling of business. The first recommendation for the company is to organize for leadership training programs for all employees and managers within the firm. It is important to note that education can promote skills and professionalism in handling customers in the market (Vakulenko et al., 2019). Poor leadership approaches from the company have seen it face criticism in the recent past. Much needs to be done to ensure that each employee is well trained and skilled for the job in a bid to improve the delivery of services. Digital approaches to gathering and disseminating information should be overlooked as they can help advance operations in the market. For instance, application of big data analytics can prove to be strategic towards storage of a large pool of information, which is useful for future decision making (Dixit, Clouse and Turken, 2019). Companies across the world that have adopted the right approaches to communication and knowledge management have proved to be efficient in each operation. Information gathering can be a tool fo0r transformation and adoption of the right strategies that can speed up change within an organization.

The second recommendation for the company is to improve its people management approaches as they impact information flow. It is through different models that the organization has managed to gather information on an internal and external level in the recent past (Dixit, Clouse and Turken, 2019). The bottom up approach implementation helps the company gather information that could prove useful in future decision making. Poor leadership style in the organization has attracted criticism in the past as some workers have been treated in an unfair manner (Vakulenko et al., 2019). For instance, the process of hiring new employees and joining hands with suppliers should be transparent and supportive of ethical conduct. Failure to pay employees the right wages can attract failure or discouragement when performing various duties. Leadership abilities for employees can be improved through developmental programs and training (Majed, Nuraddin and Hama, 2018). Equally, there is a need to improve its coverage to other markets as a way of extending ways to gather information on operations within the industry. Improving approaches to handling of information and protecting the same knowledge might prove strategic in promoting performance at Amazon.

Using big data analytics and artificial intelligence can help the organization make an impact in the consumer market (Misra, Hariharan and Khaneja, 2003). It is important to note that collecting information on digital platforms can help create a large pool of information regarding knowledge management. It is through artificial intelligence that individuals and organizations can manage to gather necessary reviews and feedback on the quality of service that they receive. Poor knowledge management approaches can be detrimental to efforts that can promote innovation in an organization (McAdam, 2000). It is recommended that technology used as a tool that enhances knowledge management at Amazon Inc. The company ensures receives reviews from customer for services rendered and it is important to explore how important such information is to the organization. Feedback essentially entails important aspects on operations that customers present after purchasing or having an experience with the company (Vakulenko et al., 2019). Customer feedback has been a pillar and source of information that is important for future decision making. It is through such information that many multinational companies can predict trends in the market for informed decisions. The feedback customers provide is normally used to plan future activities and understand aspects of consumer behavior. Collecting such information would be strategic toward assessing and understanding trends that impact knowledge management approaches.

The most strategic approach that most firms can partner with Amazon is by selling their products on its e-commerce platform. For instance, Chico’s is a women brand company that resolved to sell their products on the Amazon platform (Zennyo, 2020). It is important to highlight that the company has since improved its sales and faces an imminent growth in its operations. Another strategic alliance that the company has formed before involves Kohl’s that started accepting Amazon returns across all their outlets. The move was made an aimed at increasing traffic towards their stores that are distributed countrywide (Vakulenko et al., 2019). It is important to note that there are many suppliers who join hands with Amazon on a daily basis in a bid to promote their businesses. According to statistics, over 20 companies that have joined strategic hands with Amazon made over 10% of their revenue from online sales on the company’s platform. The bargaining power of suppliers is an important aspect that should be considered when handling operations within the organization (Dillaway, 2021). The high number of suppliers that the company has accumulated makes them lose their bargaining powers within the industry. The fact that Amazon has an established brick-and-mortar system for making purchases has attracted many suppliers who now sell their products on its online store.

7.0 Conclusion

To sum it up, the report explores Amazon as a giant online retailer that has taken the world by storm, especially in developed markets. Knowledge management in an organization is an important aspect that should be considered in a bid to promote performance. Information is crucial in decision making and failure to manage information well can be detrimental to efforts of promoting operations. Amazon uses different strategies in managing information internally and externally including incorporation of traditional and digital methods of communication. For instance, adopting innovative practices in the company has led to increased operations in a significant manner. Equally, being innovative has led to development of new strategies in shopping that have shaped experiences for many customers on a global front. The prime option promotes fast and free delivery for products to customers for the first one thousand items. Externally, the company relies on innovation and an online business model that have both proved important in promoting operations in the industry. In essence, the report lays emphasis on internal and external approaches to management of knowledge within Amazon as a giant in the industry. Application of the right approaches to KM will be strategic towards promoting profitability for organizations such as Amazon.

Ahmed, P. and Shepherd, C.D., 2010.  Innovation management: Context, strategies, systems and processes . Pearson.

Alavi, M. and Leidner, D.E., 2001. Knowledge management and knowledge management systems: Conceptual foundations and research issues.  MIS quarterly , pp.107-136.

Correll, N., Bekris, K.E., Berenson, D., Brock, O., Causo, A., Hauser, K., Okada, K., Rodriguez, A., Romano, J.M. and Wurman, P.R., 2016. Analysis and observations from the first amazon picking challenge.  IEEE Transactions on Automation Science and Engineering ,  15 (1), pp.172-188.

De Long, D.W. and Fahey, L., 2000. Diagnosing cultural barriers to knowledge management.  Academy of Management Perspectives ,  14 (4), pp.113-127.

Dillaway, M.E., 2021. The New” Web-Stream” of Commerce: Amazon and the Necessity of Strict Products Liability for Online Marketplaces.  Vand. L. Rev. ,  74 , p.187.

Dixit, A., Clouse, C. and Turken, N., 2019. Strategic business location decisions: Importance of economic factors and place image.  Rutgers Business Review ,  4 (1).

Easterby-Smith, M. and Lyles, M.A. eds., 2011.  Handbook of organizational learning and knowledge management  (No. 2nd ed). Chichester: Wiley.

Hislop, D., Bosua, R. and Helms, R., 2018.  Knowledge management in organizations: A critical introduction . Oxford university press.

Maital, S. and Seshadri, D.V.R., 2012.  Innovation management: strategies, concepts and tools for growth and profit . SAGE Publications India.

Majed, S.Z., Nuraddin, S.H. and Hama, S.V.S., 2018. Analyzing the amazon success strategies.  Journal of process management. New Technologies ,  6 (4), pp.65-69.

Mathew, S. and Varia, J., 2014. Overview of amazon web services.  Amazon Whitepapers .

McAdam, R., 2000. Knowledge management as a catalyst for innovation within organizations: a qualitative study.  Knowledge and process management ,  7 (4), pp.233-241.

Mergel, I., 2016. Agile innovation management in government: A research agenda.  Government Information Quarterly ,  33 (3), pp.516-523.

Misra, D.C., Hariharan, R. and Khaneja, M., 2003. E-knowledge management framework for government organizations.  Information systems management ,  20 (2), pp.38-48.

Muninger, M.I., Hammedi, W. and Mahr, D., 2019. The value of social media for innovation: A capability perspective.  Journal of Business Research ,  95 , pp.116-127.

Nisar, T.M., Prabhakar, G. and Strakova, L., 2019. Social media information benefits, knowledge management and smart organizations.  Journal of Business Research ,  94 , pp.264-272.

Onyusheva, I. and Seenalasataporn, T., 2018. Strategic Analysis of Global E-Commerce And Diversification Technology: The Case Of Amazon. Com INC.  The EUrASEANs: journal on global socio-economic dynamics , (1 (8)), pp.48-63.

Peprah, A.A., Giachetti, C., Larsen, M.M. and Rajwani, T.S., 2021. How Business Models Evolve in Weak Institutional Environments: The Case of Jumia, the Amazon. Com of Africa.  Organization Science .

Quintas, P., Lefrere, P. and Jones, G., 1997. Knowledge management: a strategic agenda.  Long range planning ,  30 (3), pp.385-391.

Tou, Y., Watanabe, C., Moriya, K., Vurpillat, V. and Neittaanmäki, P., 2019. A new concept of R&D in neo open innovation: transformation of R&D triggered by Amazon.  International Journal of Managing Information Technology ,  11 (1).

Trott, P., 2011. Innovation Management & New Product Development , Trans.

Uden, L., Wang, L.S., Corchado Rodríguez, J.M., Yang, H.C. and Ting, I., 2014.  The 8th International Conference on Knowledge Management in Organizations . Springer Netherlands.

Vakulenko, Y., Shams, P., Hellström, D. and Hjort, K., 2019. Service innovation in e-commerce last mile delivery: Mapping the e-customer journey.  Journal of Business Research ,  101 , pp.461-468.

Wiig, K.M., 1997. Knowledge management: an introduction and perspective.  Journal of knowledge Management .

Zennyo, Y., 2020. Strategic contracting and hybrid use of agency and wholesale contracts in e-commerce platforms.  European Journal of Operational Research ,  281 (1), pp.231-239.

Cite this page

Similar essay samples.

• Essay on Supply Chain Management Coca Cola
• Essay on Blueprint for Professional and Personal Growth
• Essay on Alibaba and the Analytics’ Translator
• Extra Credit: An Article Review
• Essay on Applying Information Security Management Frameworks in Access...
• Critically evaluate how psychologists have responded to Piaget’s the...

New user? Create an account

Forgot your password?

Forgot your username?

Advertisement

The Knowledge Management Genius of Amazon.com

Join or login to save this to your library

Contributor

Marc Rosenberg

President, Marc Rosenberg and Associates

—Jeff Bezos, Amazon founder and CEO

How does Amazon.com so effortlessly connect “zillions” of people with “zigabytes” of product information? The answer, in part, is through use of advanced knowledge-management (KM) techniques. We in the eLearning field can learn a lot from how Amazon approaches the relationship between customers and information.

Enhancing value by using KM principles

Most people think of Amazon as one of the world’s most successful eCommerce companies, and it is. From the beginning, Amazon determined that the user experience—the ability of its customers to find what they want, when they want it, quickly and easily—was a key to success. But that wasn’t enough. If the system could help customers accomplish their goals in an intuitive and personalized way, it would add even more value to the experience.

That’s where knowledge management helps. Whether they call it KM or not, Amazon uses KM principles and practices to add significant value for their customers in many ways:

Implications for us: A single portal and interface provides the employees with a common, familiar, and easy-to-use gateway to workplace knowledge in all forms. Courseware, eLearning, website, videos, on-the-job tools—it all shows up in the same place.

Implications for us: Workers should not have to figure out how to read or interpret content because it displays differently. Metaphors, flowcharts, and other organizing structures have value, but if every site has its own presentation strategy, requiring its own learning curve, that value significantly diminishes and can be disconcerting to users. Consistency matters, a lot.

Implications for us: This enables workers to quickly access only the content they need and relieves them from wasting time scanning elaborate documents or indices to find what they need. Remember, it’s not about searching; it’s about finding . Anything we can do to help people find what they need—faster—is a good thing.

Implications for us: By moving content creation to the source, the responsibility of content completeness, relevance, and accuracy also moves to the most accountable party. It also empowers SMEs.

Implications for us: Productivity and efficiency is enhanced when the system has capabilities to “know” users and provide the most important content— for them— at the moment of need.

Implications for us: A sense of community without formal communities of practice.

Implications for us: After content validity, ease of use will be the most critical aspect of any KM effort. Are the transactions your people have with your LMS, eLearning, and other resources as easy and consistent?

Implications for us: Let the system do the searching! Combined with personalization, the KM system can improve productivity and awareness of new information without repetitive and exhausting searches. This improves productivity.

Implications for us: User feedback on the value of content is one of the most effective ways to gauge KM effectiveness. It is much more impactful than page visits or downloads, for example. It also helps users to quickly distinguish important and useful content based on feedback from their peers.

Implications for us: Anything that can reduce call center or email inquiries, even a little, can result in tremendous cost savings.

Implications for us: Moving from a topic-centered approach to a performance- or task-centered approach will be very beneficial to workers as they seek to perform their jobs more effectively.

Implications for us: “Help” is, in fact, KM. Anything that improves the help function on any tool or software will be beneficial to worker productivity. Are we prone to building solutions and forgetting to include a good help resource? Unfortunately, too often, the answer is yes.

Implications for us: Essential for the increasingly mobile worker. Some current estimates place millennials, the first generation to grow up with mobile devices, at close to 30% of the US workforce, and growing.

How does your intranet stack up?

Look at your organization’s intranet, likely the primary access point to business, customer, product, technical, HR, training, and other information. How easy is it to use? How accurate is it? Does it improve over time? Does it know its users and what they need? Does it help them do their job better and more efficiently? If the answer to any of these questions is “no” or “could be better” you have a knowledge-management problem. And if you have a knowledge-management problem, you likely have learning problems as well. And if you have learning problems, you almost certainly have performance problems.

What makes Amazon.com brilliant is not just how it manages content; lots of sites do this well (examples include WebMD, Wikipedia, Flipboard, MyYahoo, and many more), but how it adjusts to users’ needs and interests, and how it connects users with information provided by others (the crowd). What if your intranet was more like this? What if you could incorporate this into your learning strategy? What if your company’s process, product, technical, and strategic knowledge were accessible in an easy-to-use way, uniformly, and consistently? What if, like Amazon, your organization’s intranet got to know you, the types of content you need, and when you need it? What if it could remind you when new content is available and hook you up with others who are interested in the same things you are? How would all this change your organizational-learning strategy? How would all this change you? The opportunities are staggering.

It’s genius!

Amazon.com is a multi-billion dollar operation and its web-based services took many years to perfect. While this may be beyond the reach of most of us, it does not mean we shouldn’t consider the model. Just think of how much more valuable our web resources could be—for business and for learning—if we just added a little bit of Amazon genius to the mix.

July 29, 2014

Addressing Skills Gaps in Enterprise L&D: A High-Level Overview

Skill-based training: embrace the benefits; stay wary of the hype, resistance to change: a recipe to set your microlearning initiative in motion, data privacy and security in elearning platforms, skills-based practices: match the right skills with the right job, make the workforce more equitable.

• Operational Resilience Frameworks in the EU and US
• MIT affiliates named 2024 Schmidt Futures AI2050 Fellows
• How Gen AI and Analytical AI Differ — and When to Use Each
• Joining a Professional Group Where Everyone Already Knows Each Other
• Continuing the Work of DEI, No Matter What Your Company Calls It

Amazon Case Study: Lessons from Jeff Bezos’ Leadership and Innovation

Introduction: the rise of amazon.

In the realm of modern business titans, few names command as much respect and intrigue as Jeff Bezos, the founder and former CEO of Amazon. Over the past quarter-century, Bezos transformed his online bookstore into a colossal entity valued at $1.6 trillion, reshaping industries and redefining corporate strategy. Amazon’s exponential growth, driven by diversification and customer obsession, offers invaluable lessons for businesses worldwide.

Below are key milestones of Amazon’s Growth that we are going to further evaluate in this article:

The Strategic Vision of Jeff Bezos

Jeff Bezos’ strategic genius lies in his ability to envision and implement a multifaceted business model. Harvard Business School professor Sunil Gupta highlights how Amazon’s approach diverges from traditional corporate strategy. Instead of focusing narrowly on a single product or service, Amazon expanded into various sectors, including e-commerce, cloud computing, media production, and personal technology. This diversified strategy, coupled with a relentless focus on customer satisfaction and long-term thinking, has been instrumental in Amazon’s success.

The Core of Amazon’s Strategy: Customer Obsession

One of the fundamental pillars of Amazon’s strategy is its unwavering focus on the customer. Bezos’ mantra, “Start with the customer and work backwards,” encapsulates this philosophy. Unlike many companies that prioritize competition or product innovation, Amazon places the customer at the center of all decision-making processes. This customer-centric approach is evident in initiatives like Amazon Prime, which not only offers fast shipping but also exclusive access to movies, TV shows, and other digital content, enhancing customer loyalty and engagement.

The Power of Diversification

Amazon’s diversification strategy is a masterclass in leveraging core competencies to enter new markets. The company seamlessly integrates its capabilities in logistics, technology, and customer insights to create synergistic business units. For instance, Amazon Web Services (AWS) emerged from the company’s internal need for robust cloud infrastructure. Today, AWS is a leading cloud services provider, generating substantial revenue and enabling Amazon to subsidize other ventures.

Similarly, Amazon’s foray into media production with Amazon Studios illustrates how diversification can strengthen the overall business ecosystem. By creating original content, Amazon enhances the value proposition of its Prime membership, driving customer retention and increasing overall sales.

Long-Term Thinking and Experimentation

A distinctive feature of Bezos’ leadership is his emphasis on long-term thinking and a willingness to experiment. Bezos often describes Amazon as a company that embraces “wandering,” a term he uses to signify the pursuit of innovative ideas through experimentation and iteration. This culture of experimentation allows Amazon to explore new business opportunities while accepting the possibility of failure.

Bezos famously stated, “If you want to have more invention, you need to be willing to fail more.” This mindset has led to groundbreaking initiatives like the development of the Kindle e-reader and the Echo smart speaker. By fostering an environment where failure is seen as a step toward success, Amazon continuously pushes the boundaries of innovation.

Case Study: The Evolution and Impact of Amazon Prime

Amazon Prime, launched in 2005, has evolved from a simple subscription service offering free two-day shipping to a comprehensive membership program with numerous benefits, fundamentally transforming customer expectations and loyalty. Let’s delve deeper into the key elements that have made Amazon Prime a cornerstone of Amazon’s strategy.

The Genesis of Amazon Prime

The inception of Amazon Prime was driven by Jeff Bezos’ vision to create a service that would foster customer loyalty and increase the frequency of purchases. For an annual fee, members could avail themselves of free two-day shipping on millions of items. This concept was revolutionary at the time, as it addressed one of the biggest pain points in e-commerce: shipping costs and delivery times.

Expanding Value Proposition

Over the years, Amazon Prime’s value proposition has expanded significantly, incorporating various services designed to enhance the customer experience and create a more integrated ecosystem. Key additions include:

• Prime Video : Launched in 2011, Prime Video offers unlimited streaming of movies and TV shows, including original content produced by Amazon Studios. This service competes with other streaming giants like Netflix and Hulu, adding significant value to the Prime membership.
• Prime Music : Introduced in 2014, Prime Music provides access to a vast library of songs and playlists, enriching the entertainment options for Prime members.
• Prime Reading : Prime Reading allows members to borrow books, magazines, and more from the Prime Reading catalog, catering to the literary interests of users.
• Amazon Fresh and Whole Foods Discounts : Prime members receive exclusive discounts and offers at Whole Foods, and in some regions, they can access Amazon Fresh for grocery deliveries. This integration into the grocery sector further embeds Amazon into the daily lives of its customers.
• Twitch Prime : Acquired in 2014, Twitch Prime offers gamers free games, in-game content, and a monthly Twitch channel subscription, appealing to the gaming community.

Driving Customer Loyalty and Engagement

Amazon Prime has been incredibly effective in driving customer loyalty and engagement. Prime members tend to spend significantly more than non-members. According to a report by Consumer Intelligence Research Partners, as of 2020, the average annual spending of Prime members was $1,400, compared to $600 for non-members . This substantial difference underscores the program’s success in increasing customer purchase frequency and basket size.

The introduction of services like Prime Video and Prime Music has made Prime an integral part of the daily lives of its members, creating a habit-forming effect. This constant engagement not only increases direct sales but also boosts the adoption of other Amazon services, such as Alexa and Kindle.

Global Expansion and Market Penetration

Amazon Prime’s success is not limited to the United States. The service has been rolled out in numerous countries, including Canada, the United Kingdom, Germany, Japan, India, and many more. Each market sees a tailored version of Prime that addresses local preferences and requirements. For instance, in India, Prime members get access to Amazon’s extensive collection of Bollywood movies and regional content, alongside free shipping and exclusive deals.

The global expansion of Amazon Prime has been strategic, targeting high-growth markets and adapting the offering to local needs. This approach has allowed Amazon to capture a significant market share and build a strong international customer base.

Technological Integration and Innovation

Technological innovation has been at the heart of Amazon Prime’s success. The introduction of features like same-day delivery, Prime Now (for ultra-fast delivery), and Amazon Key (which allows couriers to deliver packages inside a customer’s home or car) demonstrates Amazon’s commitment to leveraging technology to enhance convenience and customer satisfaction.

Additionally, Amazon’s use of data analytics to understand customer behavior and preferences has enabled the company to personalize recommendations and improve the overall shopping experience. This data-driven approach has been instrumental in increasing Prime membership renewals and reducing churn.

Financial Impact

Amazon Prime has had a profound impact on Amazon’s financial performance. Although the company does not disclose specific revenue figures for Prime, it is estimated that subscription services, which include Prime memberships, generated approximately $25.21 billion in revenue in 2020 . This revenue stream is highly lucrative due to its recurring nature, providing Amazon with a stable and predictable cash flow.

Moreover, the incremental spending by Prime members significantly boosts Amazon’s overall sales. The integration of Prime benefits into various aspects of the Amazon ecosystem, from e-commerce to entertainment, creates multiple touchpoints for revenue generation, further solidifying Amazon’s market dominance.

Prime’s success is evident in the numbers: as of 2021, Amazon Prime had over 200 million members worldwide. Prime members spend significantly more on Amazon compared to non-members, highlighting the program’s effectiveness in driving customer engagement and revenue growth.

Case Study: Amazon Web Services (AWS) – Revolutionizing the IT Industry

Amazon Web Services (AWS) has not only become a pivotal part of Amazon’s business but has also revolutionized the IT industry. Launched in 2006, AWS offers a comprehensive suite of cloud computing services, enabling businesses of all sizes to leverage powerful computing resources without the need for significant upfront investments. This case study delves into the inception, growth, and impact of AWS, highlighting key strategic decisions and their implications.

The Genesis of AWS

The inception of AWS was rooted in Amazon’s own operational challenges. As the e-commerce giant grew, it faced the need for scalable and reliable IT infrastructure to support its expanding operations. Traditional data centers were costly and inflexible, prompting Amazon to develop its own cloud-based solutions. Recognizing the potential of this technology, Jeff Bezos and his team decided to offer these capabilities to external customers, thus giving birth to AWS.

Core Services and Offerings

AWS provides a vast array of services that cater to different aspects of IT infrastructure and software development. Some of the core services include:

• Compute : Amazon Elastic Compute Cloud (EC2) allows users to rent virtual servers to run applications. It offers scalability and flexibility, enabling businesses to quickly adapt to changing workloads.
• Storage : Amazon Simple Storage Service (S3) provides scalable object storage for data backup, archiving, and analytics. It is known for its durability and cost-effectiveness.
• Database : AWS offers managed database services like Amazon RDS (Relational Database Service) and DynamoDB (NoSQL database), which simplify database management and scaling.
• Networking : Amazon Virtual Private Cloud (VPC) enables users to create isolated networks within the AWS cloud, providing enhanced security and control over network configurations.
• Machine Learning : AWS provides machine learning services such as SageMaker, which allows developers to build, train, and deploy machine learning models at scale.
• Analytics : Services like Amazon Redshift (data warehousing) and Athena (interactive query service) help businesses gain insights from their data efficiently.

Strategic Decisions and Growth

The growth of AWS can be attributed to several strategic decisions that differentiated it from traditional IT service providers:

• Pay-As-You-Go Pricing Model : AWS introduced a pay-as-you-go pricing model, allowing customers to pay only for the resources they use. This model was a game-changer, especially for startups and small businesses, as it significantly lowered the barrier to entry.
• Continuous Innovation : AWS has maintained a relentless focus on innovation, consistently launching new services and features. This commitment to innovation has kept AWS at the forefront of the cloud computing industry.
• Global Infrastructure : AWS has established a global network of data centers, ensuring low latency and high availability for customers worldwide. This extensive infrastructure has enabled AWS to serve a diverse range of industries and use cases.
• Customer-Centric Approach : AWS’s development has been heavily influenced by customer feedback. This customer-centric approach has led to the creation of services that directly address the needs and challenges faced by businesses.

Market Position and Financial Impact

AWS has grown to become the dominant player in the cloud computing market, consistently capturing a significant market share. As of 2021, AWS held approximately 32% of the global cloud market, outpacing competitors like Microsoft Azure and Google Cloud.

Financially, AWS has become a major contributor to Amazon’s overall revenue and profitability. In 2020, AWS generated $45.37 billion in revenue, accounting for a substantial portion of Amazon’s operating income. The high margins associated with AWS services have provided Amazon with the financial flexibility to invest in other strategic initiatives.

AWS’s Impact on Businesses and Industries

AWS’s impact extends far beyond Amazon’s financial performance. It has fundamentally changed how businesses approach IT infrastructure and software development. Key impacts include:

• Cost Efficiency and Scalability : AWS’s cloud services have enabled businesses to reduce capital expenditures and operational costs. Companies can scale their infrastructure up or down based on demand, ensuring cost efficiency and flexibility.
• Fostering Innovation : AWS has democratized access to advanced technologies, allowing startups and enterprises to innovate without the constraints of traditional IT infrastructure. This has led to a surge in technological advancements across industries.
• Accelerating Digital Transformation : AWS has been a catalyst for digital transformation, helping businesses transition from on-premises solutions to cloud-based architectures. This shift has enhanced agility, collaboration, and overall business performance.
• Supporting Diverse Use Cases : AWS’s versatile offerings cater to a wide range of use cases, from e-commerce and healthcare to finance and entertainment. This versatility has made AWS an indispensable partner for organizations across various sectors.

Strategic Partnerships: Netflix and AWS

One of the most prominent examples of AWS’s impact is its partnership with Netflix. As a leading streaming service, Netflix relies heavily on AWS for its infrastructure needs. AWS provides Netflix with the scalability and reliability required to deliver high-quality streaming experiences to millions of users worldwide.

Netflix leverages a range of AWS services, including EC2 for computing power, S3 for storage, and CloudFront for content delivery. This infrastructure enables Netflix to handle massive amounts of data and ensure uninterrupted service even during peak usage times. The partnership with AWS has been instrumental in Netflix’s ability to innovate and expand its global reach.

Challenges and Competition

Despite its success, AWS faces several challenges and competitive pressures:

• Intense Competition : AWS competes with major players like Microsoft Azure, Google Cloud, and IBM Cloud. These competitors are continuously enhancing their offerings and capturing market share, posing a constant challenge to AWS’s dominance.
• Security and Compliance : As cloud adoption grows, so do concerns around security and compliance. AWS must continuously invest in robust security measures and ensure compliance with global regulations to maintain customer trust.
• Cost Management : While AWS’s pay-as-you-go model is beneficial, managing cloud costs can become complex for businesses. AWS needs to provide tools and best practices to help customers optimize their cloud expenditures.

Addressing Controversies and Challenges

Despite its successes, Amazon has faced significant controversies and challenges. Criticisms regarding the treatment of warehouse employees, especially during the COVID-19 pandemic, have sparked debates about labor practices and corporate responsibility. Moreover, concerns about Amazon’s impact on small businesses and environmental sustainability have prompted calls for greater accountability.

Addressing these issues requires a multifaceted approach. Improving working conditions, enhancing transparency, and investing in sustainable practices are essential steps toward building a more responsible and resilient business model. As Amazon continues to grow, balancing profitability with social and environmental responsibility will be crucial for its long-term success.

The CDO TIMES Bottom Line

Amazon’s meteoric rise offers profound lessons for business leaders. Jeff Bezos’ strategic vision, characterized by customer obsession, diversification, and long-term thinking, has fundamentally reshaped the business landscape. Companies, regardless of size or industry, can draw inspiration from Amazon’s journey.

Emulating Amazon’s customer-centric approach, fostering a culture of experimentation, and leveraging core competencies for diversification can drive sustainable growth and innovation. As businesses navigate an increasingly complex and competitive environment, adopting these strategies will be key to unlocking new opportunities and achieving lasting success.

For businesses seeking to replicate Amazon’s success, the key takeaways are clear:

• Customer Obsession : Always prioritize the customer experience and continually seek ways to exceed expectations.
• Value Expansion : Consistently add new features and benefits that align with customer needs and preferences.
• Technological Innovation : Leverage technology to enhance convenience and personalize the customer journey.
• Global Adaptation : Tailor offerings to meet the unique demands of different markets, ensuring relevance and appeal.
• Data-Driven Insights : Use data analytics to understand customer behavior and drive strategic decisions.

By embracing these principles, companies can build strong, loyal customer bases and achieve sustained growth and profitability.

For companies looking to replicate specifically AWS’s success, the key lessons are:

• Innovation and Customer Focus : Continuously innovate based on customer needs and feedback. Prioritize customer satisfaction and adapt services to address evolving demands.
• Scalability and Flexibility : Develop scalable solutions that offer flexibility and cost efficiency. Ensure that your offerings can grow with your customers’ needs.
• Global Reach and Reliability : Build a robust and reliable global infrastructure to serve customers worldwide. Invest in high availability and low latency to enhance user experience.
• Security and Compliance : Prioritize security and compliance to protect customer data and build trust. Stay ahead of regulatory changes and implement best practices.

By embracing these principles, businesses can create impactful and sustainable cloud services that drive growth and innovation.

Understanding and applying the principles that have propelled Amazon to the forefront of global commerce, will help executives to chart a course toward greater resilience, adaptability, and customer satisfaction. As the business world continues to evolve, the lessons from Amazon’s journey remain as relevant and impactful as ever.

Love this article? Embrace the full potential and become an esteemed full access member, experiencing the exhilaration of unlimited access to captivating articles, exclusive non-public content, empowering hands-on guides, and transformative training material. Unleash your true potential today!

Subscribe on LinkedIn : Digital Insider

Become a paid subscriber for unlimited access, exclusive content, no ads: CDO TIMES

Do You Need Help?

Consider bringing on a fractional CIO, CISO, CDO or CAIO from CDO TIMES Leadership as a Service. The expertise of CDO TIMES becomes indispensable for organizations striving to stay ahead in the digital transformation journey. Here are some compelling reasons to engage their experts:

• Deep Expertise : CDO TIMES has a team of experts with deep expertise in the field of Cybersecurity, Digital, Data and AI and its integration into business processes. This knowledge ensures that your organization can leverage digital and AI in the most optimal and innovative ways.
• Strategic Insight : Not only can the CDO TIMES team help develop a Digital & AI strategy, but they can also provide insights into how this strategy fits into your overall business model and objectives. They understand that every business is unique, and so should be its Digital & AI strategy.
• Future-Proofing : With CDO TIMES, organizations can ensure they are future-proofed against rapid technological changes. Our experts stay abreast of the latest AI, Data and digital advancements and can guide your organization to adapt and evolve as the technology does.
• Risk Management : Implementing a Digital & AI strategy is not without its risks. The CDO TIMES can help identify potential pitfalls and develop mitigation strategies, helping you avoid costly mistakes and ensuring a smooth transition with fractional CISO services.
• Competitive Advantage : Finally, by hiring CDO TIMES experts, you are investing in a competitive advantage. Their expertise can help you speed up your innovation processes, bring products to market faster, and stay ahead of your competitors.

By employing the expertise of CDO TIMES, organizations can navigate the complexities of digital innovation with greater confidence and foresight, setting themselves up for success in the rapidly evolving digital economy. The future is digital, and with CDO TIMES, you’ll be well-equipped to lead in this new frontier.

Do you need help with your digital transformation initiatives? We provide fractional CAIO, CDO, CISO and CIO services, do a Preliminary Tech Navigator Assessment and we will help you drive results and deliver winning digital and AI strategies for you! Schedule your FREE Tech Navigator Call NOW:

Subscribe now for free and never miss out on digital insights delivered right to your inbox!

Type your email…

Share this:

• Ukraine blackouts caused by malware attacks warn against evolving cybersecurity threats to the physical world – UC Santa Cruz
• Global: New technology and AI used at borders increases inequalities and undermines human rights of migrants – Amnesty International

Carsten Krause

I am Carsten Krause, CDO, founder and the driving force behind The CDO TIMES, a premier digital magazine for C-level executives. With a rich background in AI strategy, digital transformation, and cyber security, I bring unparalleled insights and innovative solutions to the forefront. My expertise in data strategy and executive leadership, combined with a commitment to authenticity and continuous learning, positions me as a thought leader dedicated to empowering organizations and individuals to navigate the complexities of the digital age with confidence and agility. The CDO TIMES publishing, events and consulting team also assesses and transforms organizations with actionable roadmaps delivering top line and bottom line improvements. With CDO TIMES consulting, events and learning solutions you can stay future proof leveraging technology thought leadership and executive leadership insights. Contact us at: [email protected] to get in touch.

Leave a Reply Cancel reply

Discover more from the cdo times.

Subscribe now to keep reading and get access to the full archive.

Continue reading

You must be logged in to post a comment.

MBA Knowledge Base

Business • Management • Technology

Home » Management Case Studies » Case Study of Amazon: Management Information Systems for Business Growth

Case Study of Amazon: Management Information Systems for Business Growth

Globalization can be credited for causing significant alterations in the way business is conducted and the increasingly competitive and constantly changing business environment . In many large corporations, it is not easy to detect strategic issues that confront business operations . It is also difficult to develop sustainable programs that steer organizational success . However, the advent of computers and information technology makes it easy to prepare strategic plans that facilitate the growth and success of companies . An ‘MIS’ is a strategic system that aids in collecting, analyzing, disseminating, and storing organizational data in the mode of information required to implement management functions.

Management Information Systems (MIS) are concerned with planning for, development, management, and use of information technology tools to help people perform all tasks related to information processing and management. MIS aids in planning by offering the necessary information that assists in firm decision-making, especially in large organizations where the managers cannot exert direct control over all operations. It also reduces data overload by changing the bulk of data in a condensed form. In doing this, MIS eliminates the confusion often associated with excessively detailed facts. MIS also encourages decentralization and coordination by providing a platform for monitoring work at the lower levels.

An example of a company that utilizes MIS to steer growth and management is Amazon, a major e-commerce company based in Seattle. In 1995, Jeff Bezos, an investment banker by profession, saw an opportunity in the unexploited internet sphere. He established a site that sold directly to customers over the Internet. The company achieved a significant milestone by becoming one of the very first large-scale retail enterprises to make sales over the Internet. Over the years, Amazon has metamorphosed into one of the most influential internet retailers by using MIS.

Amazon’s Exploitation of IT in Decision Making

With computers permeating all areas of human life, rarely any company or business franchise does not extensively depend on IT systems. However, there are certain fields that rely to a large extent on MIS. The kind of e-commerce carried out at Amazon is one such field. Information management is vital for effectively delivering several managerial operations at different organizational levels . Management processes that are facilitated by the application of information technology at Amazon include controlling , planning , and decision-making .

MIS aids in the decision-making process at Amazon.com by providing the required information in an updated and accurate form needed in an up-to-date and accurate system. The benefits of IT in decision-making, therefore, include the usability of the information provided and the timeliness of information delivery. It also includes the delivery of information to those who need it.

Amazon offers its top-notch e-commerce programs to other dealers and private retailers. As a matter of fact, many established retail companies and private dealers boost their sales by leveraging the stage provided by Amazon’s e-commerce. By manipulating programs such as Marketplace and Advantage, Amazon has managed to stay on top of the online retail business and offer its customers a wide selection of items on the e-commerce platform.

Amazon manipulates MIS systems to convert data into information that aids decision-making. The company successfully implements an integrated system through the web by properly operating the information system and upholding its technical and application system. IT is the core of business at Amazon. Proper manipulation of information technology results in increased profits . The recent trend of profitability indicates that the management at Amazon has stayed on top regarding its leverage of information technology .

At Amazon, MIS systems are valuable as they use the raw data to administer simulations. These simulations help predict possibilities and ‘what if’ scenarios. One such use of MIS at Amazon is in projecting the impact of price change on merchandise sales. The Decision Support Systems (DSS) implemented at Amazon facilitate decision-making and cannot be achieved without MIS systems.

Amazon uses MIS systems to organize massive volumes of data into coherent reports . These organized data are easily understood by managers and make strategic planning easy. By examining the reports and statements, managers identify information patterns and financial patterns that can aid in strategic planning for growth . Like most companies, Amazon faces its fair share of challenges in satisfying its customers’ needs and distribution channels . The company addresses these challenges using high-tech software that allows it to homogenize procedures on its back-end systems while still delivering quality and personalized services to its customers .

Customers gain access to the company’s systems using their client of choice, such as a mobile device, a web browser, or a procurement system. This level of interaction is referred to as the presentation layer. On the next layer (application layer), Amazon’s commerce logic is controlled by a company resource planning system. The demanding data collection and management that takes place during the procurement process is governed by a tier of databases called the data layer. Data at Amazon is retrieved and analyzed without the hustle of lengthy manipulation and processing. All three tiers and systems are reinforced by several technological applications that ensure the effectiveness of the systems and teamwork on the part of employees.

Technology Used at Amazon

The company design at Amazon is done in such a way that the growth of the business is driven by technological innovation . The technology used allows the company to offer a variety of products at relatively low prices. One of Amazon’s notable technological innovations includes Search Inside the Book, which allows clients to have a personalized experience while shopping for books. Another innovation is 1-Click Shopping, which allows customers to purchase online goods using one mouse click based on the information generated from the customers’ previous entries. The customers are saved from buying items using the shopping cart. Other innovations provided by Amazon include Wish List and Listmania, which help customers to identify new items and make advised choices.

One advantage that Amazon has in the e-commerce market is its ability to manage its information systems efficiently. Amazon develops its information systems to solve management challenges that arise during business. The company has built its core framework founded on a Service Oriented Architecture (SOA). This system supports sustained growth while not compromising performance. The SOA enables the company to construct several software components. It is a complete, systematically distributed, devolved service program that operates several applications.

How Amazon.com Responds to Competition

Competition brings out the best in any business franchise. Amazon faces strong competition in its online market from other e-commerce companies such as eBay and Yahoo! who have honed their use of information systems and are constantly churning out new products and services. Another company that poses the greatest competition to Amazon is Google. The threat from Google is mainly because many online consumers manipulate its search engine. Google has also expanded to other e-commerce services.

Every strong company must possess at least one core competency . This competency is the service that the company excels at offering. By constructing a robust management information system, Amazon can obtain an edge over its competitors. MIS systems can offer Amazon.com the tools to understand the e-commerce market better than its competitors.

To stay ahead of the competition, Amazon offers new products such as digital mapping, online short stories, and other services to improve the client experience. In addition, the company constantly enhances the design, content, and usability of its website. It endeavors to establish a digital relationship with all its customers , employees, and suppliers. It is important to note that the changes made at Amazon.com to improve sales and marketing experience are made deliberately by the company’s management.

Amazon has managed to manipulate the power of the Internet and balance the models of interaction and hyperlinking to come up with a wide range of data for its customers and management. The virtual system created at Amazon offers a broader selection of book titles than can be found in any bookstore. Customers can browse book titles, synopses, and reviews, which help make informed choices.

Amazon.com has set up two key systems that run its business systems. Amazon Web Services (AWS), announced in 2002, gives developers unlimited access to the company’s advanced technological platform. The developers build applications based on AWS, which helps run the company’s internet operations. The other business system at Amazon is the Amazon Simple Storage Service (S3). This system is constructed to enable easy web-scale processing. The S3 is also useful since it provides Amazon with dependable, fast, scalable, and cheap data storage. The S3 enables unlimited information storage and recovery using a distinctive developer-assigned key.

Amazon has achieved significant milestones in trying to conform to international laws regarding e-commerce. To make the company relevant to the Chinese market, the company has rolled out an official Chinese website called Joyo. It is an attempt to stay ahead of its competition, especially in the Asian market.

Amazon.com implements a flat and lean structure that enables it to be flexible and to achieve strategic planning . The company’s structure allows it to avoid the managerial dilemma often accompanying branches or outlets. It also helps in reducing operational costs and decision-making.

The company uses a Web-based Information System (WIS), which allows customers to access reasonable information while using the company website. The company gathers information from customers and other operations, then processes this information. The information must be made available to users for the company to make its revenue.

How Amazon.com Handles Security Risks Created by IT

In e-commerce, security can be viewed from two different standpoints. With regard to software development, security is connected to the features of a program or system. One security feature is to certify that confidential data is encrypted and that passwords contain over six characters. For users, protection is more against attacks from fraudsters and not particular aspects of the software system. A secure platform should allow confidentiality of information, availability of data, and integrity of the information.

Doing business over the Internet exposes a company to many risks, especially concerning data security and fraud. To deal with internet insecurity, Amazon has devised authentication mechanisms that guarantee data security from illegal access. To make items public or private requires the permission of specific users. This measure ensures that fraudsters and identity thieves are kept at bay.

The Smart Analytic Search (SAS) system used at Amazon.com is designed to detect and eliminate or minimize fraud cases. Since the system acts as a warehouse for vast amounts of data, it is built to gauge the personalization of each customer. It also assesses the efficiency of Amazon’s services. The Smart Analytic Search is designed to detect internet fraud, which often involves credit card fraud. Amazon exploits SAS to study the behavioral trends of fraud. From these trends, the company can predict the probability of fraud and the likely targets.

To conclude, Amazon should seek ways of improving its Web-based Information System since this is the portion of its structure with which customers interact. Such an improvement can take the company a step ahead of its main competitors in e-commerce and improve its revenue basket. The survival of Amazon and its continued profitability depends on its ability to create a sustainable and flexible MIS that can adapt to the constantly changing e-commerce market. It is safe to say that Amazon’s success lies in its procedure of collecting and storing information from customers and making informed decisions based on the analysis of such data. Though there is definitely room for improvement, especially regarding the company’s MIS, Amazon has devised mechanisms to ensure customer safety and continued relevance. The company constantly updates its information systems, which have been the core of its business success. The staff and management at Amazon believes that by constantly updating the information systems, the company is safely on the route to financial success and sustainable business growth . The security measures in place for the detection of internet fraud and protection of customers from fraudsters are also important to the company’s image and repute in the face of a highly competitive market.

Related posts:

• Case Study on Information Systems: Cisco Systems
• Case Study on Information Systems: Premier Automotive Services Limited
• Case Study on Information Systems: Brown and Gordon Auto parts
• Case Study on Information Systems: Integrated Customer Ordering Service at Marks & Spencer
• Case Study of FedEx: Leveraging Information Technology to Grow Business
• Case Study of Air-Asia : Strategic Role of Information System in Business
• Case Study: Success of Amazon’s Kindle Fire
• Case Study: Management Information System at Dell

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Amazon Change Management Case Study

Change is an essential component of any successful organization, and in today’s rapidly evolving business environment, the ability to manage change effectively is more critical than ever. 

One company that has demonstrated exceptional change management skills is Amazon, which has undergone numerous transformations in its nearly three decades of operation. 

From its early days as an online bookseller to its current status as a global technology and retail giant, Amazon has had to adapt to changing market conditions and customer demands. 

In this blog post, we will examine Amazon’s change management practices and explore a case study of the company’s acquisition of Whole Foods to understand how Amazon manages change on a large scale. 

By analyzing Amazon’s change management strategies, we hope to provide insights that can help other organizations navigate change and remain competitive in today’s dynamic business environment.

Overview of Amazon History and Growth 

Amazon was founded in 1994 by Jeff Bezos as an online bookstore in Seattle, Washington. Initially, the company operated out of Bezos’ garage and was primarily focused on selling books online. However, Amazon quickly expanded its offerings to include a wide range of products, including electronics, toys, clothing, and more.

In 1997, Amazon went public, and by the end of the year, it had grown to serve customers in all 50 US states and more than 160 countries. Throughout the 2000s, Amazon continued to expand its business, launching new services like Amazon Web Services (AWS) in 2006 and the Amazon Kindle e-reader in 2007.

By 2010, Amazon had become the world’s largest online retailer, offering millions of products to customers around the world. In recent years, Amazon has continued to grow and diversify its business, expanding into new markets like groceries, healthcare, and entertainment. Today, Amazon is one of the largest companies in the world, with a market capitalization of over $1.5 trillion and a workforce of more than 1.3 million employees.

Need of Change Management at Amazon 

As Amazon has grown and evolved over the years, the need for effective change management has become increasingly important. Amazon operates in a fast-paced, rapidly changing industry, and the company must continually adapt to new technologies, shifting customer needs, and changing market conditions. Without effective change management, Amazon could struggle to keep pace with these changes and risk falling behind competitors.

Additionally, Amazon’s size and scale can make change management particularly challenging. With more than 1.3 million employees and operations in numerous countries around the world, implementing changes across the organization can be complex and time-consuming. Effective change management processes are essential to ensure that changes are communicated clearly and effectively to all stakeholders, and that the changes are implemented in a way that minimizes disruption to the business.

Overall, the need for change management at Amazon is driven by the company’s growth and the fast-paced, ever-changing nature of the business environment in which it operates. By effectively managing change, Amazon can continue to stay ahead of the curve and remain a leader in the global marketplace.

Amazon’s Acquisition of Whole Food

In 2017, Amazon announced its acquisition of Whole Foods, a high-end grocery store chain known for its focus on organic and locally-sourced products. The $13.7 billion acquisition marked Amazon’s entry into the grocery market, a move that was seen as a potential game-changer in the industry.

The acquisition was met with mixed reactions from investors, analysts, and industry experts. Some saw the move as a smart strategic play that would give Amazon a foothold in the lucrative grocery market, while others were skeptical of the challenges that Amazon would face in managing a physical retail operation.

Despite the challenges, Amazon moved forward with the acquisition, and in August 2017, the deal was completed. Amazon quickly began to integrate Whole Foods into its business operations, including implementing changes to the store’s pricing, product offerings, and supply chain. The acquisition also paved the way for new innovations in the grocery industry, such as the launch of Amazon Go, a cashierless convenience store that uses AI and computer vision technology to track purchases.

Analysis of change management process used by Amazon 

Amazon’s change management process during the acquisition of Whole Foods was thorough, well-planned, and executed effectively. By emphasizing communication, training, cultural integration, and flexibility, Amazon was able to successfully integrate Whole Foods into its business and begin to innovate in the grocery industry.

1. Planning: Amazon spent a significant amount of time planning for the acquisition and identifying the key changes that would need to be made to integrate Whole Foods into its business. This included identifying potential synergies, determining how to integrate supply chains and pricing strategies, and assessing the impact of the acquisition on employees and customers.

2. Communication: Effective communication was a critical component of the change management process. Amazon made a concerted effort to communicate the changes to all stakeholders, including employees, customers, and investors. The company emphasized its commitment to maintaining Whole Foods’ brand identity and values, while also highlighting the potential benefits of the acquisition for customers and employees.

3. Training and education: To ensure that employees were prepared for the changes, Amazon provided extensive training and education programs to Whole Foods employees. This included training on new technology, changes to store operations, and other aspects of the integration process.

4. Flexibility and agility: Amazon was able to be flexible and agile in its approach to the change management process. The company made adjustments as needed, based on feedback from employees and customers, and was willing to pivot its strategies when necessary

5. Cultural integration: Amazon recognized the importance of cultural integration in the change management process. The company worked to integrate the cultures of the two organizations and to ensure that Whole Foods employees felt valued and supported during the transition.

Success of change management process 

The change management process used by Amazon during the acquisition of Whole Foods was largely successful. The following are some indicators of the success of the change management process:

1. Smooth integration: Amazon was able to integrate Whole Foods into its business smoothly and quickly, with minimal disruptions to store operations or customer experience. The company was able to implement changes to pricing, supply chain, and product offerings without significant negative impacts.

2. Employee satisfaction : Amazon prioritized the needs and concerns of Whole Foods employees during the integration process, providing extensive training and education, and working to integrate the cultures of the two organizations. This approach contributed to high levels of employee satisfaction and engagement, and helped to maintain employee loyalty to the Whole Foods brand.

3. Innovation: The acquisition of Whole Foods paved the way for new innovations in the grocery industry, such as the launch of Amazon Go and the expansion of Amazon Fresh. These innovations have helped to position Amazon as a major player in the grocery market and have contributed to the company’s overall growth.

4. Financial success: The acquisition of Whole Foods has been a financial success for Amazon, with the company seeing significant growth in its grocery business in the years since the acquisition. This financial success is a strong indicator of the effectiveness of the change management process.

These indicators suggest that Amazon’s change management process was effective in managing the challenges of integrating a large and complex organization into its business and positioning the company for continued growth in the grocery industry

Final Words  

The success of Amazon’s change management process during the acquisition of Whole Foods highlights the importance of effective change management in modern business. With technology and the competitive landscape changing rapidly, businesses must be able to adapt quickly to stay relevant and competitive. Effective change management is essential for ensuring that organizations can manage the challenges of change and position themselves for success in a rapidly changing business environment.

Amazon’s acquisition of Whole Foods serves as a valuable case study on the importance of effective change management in modern business. By emphasizing planning, communication, training, cultural integration, and flexibility, Amazon was able to successfully integrate Whole Foods into its business and position itself for continued growth in the grocery industry. The lessons learned from this case study can serve as a valuable guide for future change management efforts in both Amazon and other organizations.

About The Author

Tahir Abbas

Related posts.

How to Do Gap Analysis in Change Management? – Explained

ITIL Change Management Risk Assessment

Gleicher’s Formula for Change Management – Benefits & Limitations

Recently Visited

Top Categories

Children's Books

Discover Diverse Voices

More Categories

All Categories

New & Trending

Deals & Rewards

Best Sellers

From Our Editors

Memberships

Communities

• Computers & Technology

Amazon Prime Free Trial

FREE Delivery is available to Prime members. To join, select "Try Amazon Prime and start saving today with FREE Delivery" below the Add to Cart button and confirm your Prime free trial.

• Cardmembers earn 5% Back at Amazon.com with a Prime Credit Card.
• Unlimited FREE Prime delivery
• Streaming of thousands of movies and TV shows with limited ads on Prime Video.
• A Kindle book to borrow for free each month - with no due dates
• Listen to over 2 million songs and hundreds of playlists

Important:  Your credit card will NOT be charged when you start your free trial or if you cancel during the trial period. If you're happy with Amazon Prime, do nothing. At the end of the free trial, your membership will automatically upgrade to a monthly membership.

Return this item for free

We offer easy, convenient returns with at least one free return option: no shipping charges. All returns must comply with our returns policy.

• Go to your orders and start the return
• Select your preferred free shipping option
• Drop off and leave!

Download the free Kindle app and start reading Kindle books instantly on your smartphone, tablet, or computer - no Kindle device required .

Read instantly on your browser with Kindle for Web.

Using your mobile phone camera - scan the code below and download the Kindle app.

Image Unavailable

• To view this video download Flash Player

Knowledge Management Strategy: A case Study Paperback – January 20, 2012

Purchase options and add-ons.

• Print length 84 pages
• Language English
• Publication date January 20, 2012
• Dimensions 5.91 x 0.19 x 8.66 inches
• ISBN-10 3847343815
• ISBN-13 978-3847343813
• See all details

Product details

• Publisher ‏ : ‎ LAP LAMBERT Academic Publishing (January 20, 2012)
• Language ‏ : ‎ English
• Paperback ‏ : ‎ 84 pages
• ISBN-10 ‏ : ‎ 3847343815
• ISBN-13 ‏ : ‎ 978-3847343813
• Item Weight ‏ : ‎ 4.8 ounces
• Dimensions ‏ : ‎ 5.91 x 0.19 x 8.66 inches

Customer reviews

• 5 star 4 star 3 star 2 star 1 star 5 star 0% 0% 0% 0% 0% 0%
• 5 star 4 star 3 star 2 star 1 star 4 star 0% 0% 0% 0% 0% 0%
• 5 star 4 star 3 star 2 star 1 star 3 star 0% 0% 0% 0% 0% 0%
• 5 star 4 star 3 star 2 star 1 star 2 star 0% 0% 0% 0% 0% 0%
• 5 star 4 star 3 star 2 star 1 star 1 star 0% 0% 0% 0% 0% 0%

Customer Reviews, including Product Star Ratings help customers to learn more about the product and decide whether it is the right product for them.

To calculate the overall star rating and percentage breakdown by star, we don’t use a simple average. Instead, our system considers things like how recent a review is and if the reviewer bought the item on Amazon. It also analyzed reviews to verify trustworthiness.

No customer reviews

• Amazon Newsletter
• About Amazon
• Accessibility
• Sustainability
• Press Center
• Investor Relations
• Amazon Devices
• Amazon Science
• Sell on Amazon
• Sell apps on Amazon
• Supply to Amazon
• Protect & Build Your Brand
• Become an Affiliate
• Become a Delivery Driver
• Start a Package Delivery Business
• Advertise Your Products
• Self-Publish with Us
• Become an Amazon Hub Partner
• › See More Ways to Make Money
• Amazon Visa
• Amazon Store Card
• Amazon Secured Card
• Amazon Business Card
• Shop with Points
• Credit Card Marketplace
• Reload Your Balance
• Amazon Currency Converter
• Your Account
• Your Orders
• Shipping Rates & Policies
• Amazon Prime
• Returns & Replacements
• Manage Your Content and Devices
• Recalls and Product Safety Alerts
• Registry & Gift List
• Conditions of Use
• Privacy Notice
• Consumer Health Data Privacy Disclosure
• Your Ads Privacy Choices