Research on Amazon expanding to start Transportation Management Paper

RESEARCH ON AMAZON EXPANDING TO START TRANSPORTATION
Carlise V. Miles
Embry-Riddle University
December 2, 2019
Table of Contents TOC \o "1-3" \h \z \u 1.Introduction PAGEREF _Toc26300629 \h 32.Amazon's principle goods and services, market share, geographic locations where it operates, and major competitors PAGEREF _Toc26300630 \h 43.Amazon’s leadership and management philosophies PAGEREF _Toc26300631 \h 64.Amazon’s human resource management policies PAGEREF _Toc26300632 \h 95.Organizational design and marketing strategies PAGEREF _Toc26300633 \h 126.How Amazon manages cultural and ethical issues throughout the world PAGEREF _Toc26300634 \h 127.Ongoing Strategies related to global operations PAGEREF _Toc26300635 \h 138.Amazon’s e-commerce initiatives and strategies that have enhanced the growth of the company PAGEREF _Toc26300636 \h 14Market development PAGEREF _Toc26300637 \h 14Market Penetration PAGEREF _Toc26300638 \h 14Product development PAGEREF _Toc26300639 \h 15Diversification PAGEREF _Toc26300640 \h 159.Political environment and its effect on import/exports of the principal goods or services PAGEREF _Toc26300641 \h 1510.Conclusion PAGEREF _Toc26300642 \h 16
1 Introduction
Amazon is one of the leading e-commerce platforms in the world. It is based in the United States, Washington state, and has its headquarters in Seattle in the same state. The company is the second-largest private employer in the united states after Walmart, and this highlights its size and dominance in the e-commerce industry. The company became public in the late 90s, and though it took a while longer before it turned a profit, its strategic objective eventually paid off. As it grew, its market grew more prominent, and today it operates worldwide. Global operation is a logistical nightmare, and though Amazon has been trying to make the supply chain more efficient to help it remain competitive in the diverse global market. Recently, it started acquiring and leasing planes to expand its transportation capabilities and reduce the time between when a customer orders a product and when he/she receives it. It has also commissioned to build an airport in the US to handle its expanding aircraft fleet. The company has been acquiring startups such as Dispatch to help in last-mile delivery as well as attempting to perfect drone delivery. All these are measures to expand Amazon’s transportation capabilities and reduce dependence on other companies i.e., UPS, FedEx, and other partners.
Topics to be addressed will be; principle goods and services of Amazon, market share, geographic locations and major competitors. Secondly, this research paper will focus on Amazon’s leadership and management philosophies, human resource policies and recruitment strategies. This research paper will also detail a section on Amazon’s organizational structure and marketing strategies, how Amazon manages cultural and ethical issues globally, recent strategies for global operations. Additionally, this essay will cover Amazon’s ecommerce initiative and the political environment and finally a brief summary of the sections as the conclusion.
The methods that will be used to collect data for this research paper is secondary research. Sources will be periodicals, websites, journals, books, videos etc. The data collected will be evaluated for authenticity, credibility, representativeness and meaning. Internet sources will be evaluated for authorship, authority of author, authority of material and organization, currency (up to date) and objectivity.
2 Amazon's principle goods and services, market share, geographic locations where it operates, and major competitors
Amazon has several core businesses, which commands a significant share in the industry. At the moment, Amazon focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. When the founder Jeff Bezos was starting the company, he focused on selling books online. Bezos states that he chose books because they 'were great as the first best because books are incredibly unusual in one respect, that is that there are more items in the book category than there are items in any other category by far' CITATION Mic19 \l 1033 (Grothaus, 2019). The e-commerce website then evolved to stock more products and enlisted other sellers. As the company grew after nearly going bust in 2001 dot.com bubble burst, the company diversified and started venturing into other industries. Today Amazon is majorly known for its e-commerce platform, and though it accounts for nearly two-thirds of its income revenue, it has a sizable and dominant market share in other industries i.e., web services, cloud computing, artificial intelligence, and digital streaming. Amazon has evolved to become a tech company rivaling google and Microsoft in some areas, which highlight how the company has diversified its principle services offered.
Since Amazon is in several industries, it is hard to pinpoint its actual market share as a whole. In the e-commerce industry, it is the industry leader in the united states and many parts of the world except China. In China, the dominant e-commerce company is Alibaba. In the US, Amazon's e-commerce market share is 52.4%, non-US markets it is 13.7%, and 5.7% globally CITATION Cle19 \l 1033 (Clement, 2019). Its primary market, the US, Amazon has been increasing its dominance exponentially in the last few years. In 2016, Amazon held a 38.3% e-commerce market share in the US, and in 2019, it was 52.4% CITATION Cle19 \l 1033 (Clement, 2019). Its second biggest income generator is Amazon web services. At the moment, Amazon Web Services (AWS) has a 33% market share in cloud computing, which rivals Microsoft Azure's 33% (Asay, 2019). Some other experts argue that Amazon has a higher market share in cloud infrastructure as it owns nearly half of the public cloud infrastructure market worth $32 billion CITATION Jeb19 \l 1033 (Su, 2019).
Amazon is also an unignorable player in the entertainment industry. Through its Amazon prime digital streaming service, the company has been gaining a significant share in the market. The revenue from the subsidiary has increasingly exponentially in the past, and it is quickly posing a threat to other industry players like Netflix and HBO. In 2018, Amazon generated $1.7 billion in revenue from Amazon prime video, which is up nearly eight times from $200 million in 2017, and it is expected to reach $2.5 billion in 2020 CITATION Tod18 \l 1033 (Spangler, 2018).
The other segments which Amazon as ventured into like the artificial intelligence industry it is yet to dominate. It has, however, made significant progress, and it is competing with other tech companies such as google in the intelligent persona assistant cloud-based service devices such as Alexa, which rivals Google’s Home device. The two companies are competing fiercely to dominate this space and bring artificially intelligent devices closer to the users. At the moment, Amazon is the dominant position commanding a 62% market share of the intelligent personal assistant market, followed by google home with 25% CITATION Sha19 \l 1033 (Liu, 2019).
Worldwide, Amazon faces stiff competition from Alibaba. Alibaba is like Amazon and offers similar services like Amazon, except for the intelligent personal assistant devices. Both companies are dominant in their domestic markets, and they are aggressively expanding to gobble bigger market share worldwide. Amazon has been acquiring most of the firms that pose a significant threat to its dominant businesses, such as Zappos, Whole Foods, etc. It seeks to grow its market share locally as it expands. Its main competitor locally is the small online retailers and Walmart, who have been trying to break into the market. It has also been aggressively growing its market share in Europe and other continents with local acquisitions in those countries. In India, the company built an Amazon fulfillment center as it seeks to penetrate and domineer over the vast market of 1.3 billion people.
3 Amazon’s leadership and management philosophies
According to CITATION Ama191 \l 1033 (Amazon, 2019), the company is ‘guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking.’ Customer obsession is at the core of its decision making, especially ion the strategic direction of the company. According to CITATION Bla15 \l 1033 (Morgan, 2015), ‘Jeff Bezos asks thousands of Amazon managers, including himself, to ­attend two days of call-center training. Amazon’s philosophy is about listening, and most importantly, understanding the customer.’ Bezos also wrote to shareholders informing them that his focus is on improving customer services in which he asserted, 'One thing I love about customers is that they are divinely discontent. Their expectations are never static; they go up. It's human nature' CITATION Jef18 \l 1033 (Bezos, 2018). These two instances show how the company has obsessed with customer satisfaction and have been building their business around satisfying their clientele. According to CITATION Ama192 \l 1033 (Amazon, 2019), the company claims that its leaders must start from the customer and work backward while vigorously earning and keeping the customer trust. The company has long distanced itself from competition as it claims it takes away customer focus.
Secondly, Amazon has pegged its leadership and management philosophies on the passion for invention. There is a sufficient track record to support the company's desire to continue innovating. The company started with selling books, and it has evolved to other industries in which it continued to dominate. One such industry is the intelligent personal assistant market, which debuted with the Amazon Alexa, and it sought to bring artificial intelligence to its users. The company has also been innovating in ensuring it makes its operations more efficient. Through acquiring strategic companies with innovative ideas to integrate into its conglomerate business, the company has been building its innovative core. One such company is Dispatch, which was acquired in 2017, and it had developed technology to deliver the last mile CITATION Mik19 \l 1033 (Harris, 2019). The startup had built an urban delivery robot that would be delivering packages to the doorstep and would operate autonomously in the streets. It has also been experimenting with drone delivery, and though the project is in its infancy stages, the company has continued to develop its technology, hoping it will be a viable addition to its logistics network CITATION Dav191 \l 1033 (Lee, 2019). In its fulfillment centers, the company is trying to automate as many tasks as possible since it is one of the areas where the company spends most of its revenue on human resources. Amazon acquired Canvas technologies that built a warehouse robotics startup, which has been used automate some tasks in its warehouses CITATION Nic19 \l 1033 (Shields, 2019). The company has also built an automatic package sorting system, which has aided in ensuring that it can achieve 24 hours delivering to anywhere in the United States. All these and many more innovative products the company has embedded in its system from online algorithms to learn customer behavior and market-relevant products to them to acquisitions that help the company automate some of its services demonstrate the passion for invention held by the company.
Amazon has also been committed to ensuring operational excellence. The company CEO obsessed with finding ways to optimize operations and ensure that the company stays ahead in competition and customer satisfaction. It is partly the reason why the company started the Prime Air division to ensure that its supply chain is optimized and customers can receive their packages in a day when and if possible. The company also launched same-day delivery for some of its products. Amazon has been working to ensure that its supply chain is so efficient that customers can receive their packages the same day they order them. The Prime Air division is a testament to the company’s dedication to making the supply chain more efficient. Amazon has been acquiring and leasing aircraft to build its fleet to ensure better operational excellence. It is also planning on building a private airport and fulfillment center to make its services more efficient CITATION Mar193 \l 1033 (Hanbury, 2019). The same-day delivery program which the company has been trying to make it mainstream utilizes complex machine learning algorithms that helps the company to anticipate demand and ship the products to the nearest fulfillment center nearby to await the customer to order the product CITATION Wil14 \l 1033 (Melch, 2014). The program is known as anticipatory shipping, and it is the core of same-day delivery. The company has also been employing the same strategy in other areas, such as fulfillment centers. Most fulfillment centers also have complex package sorting machines and algorithms that ensure the efficiency utility of these facilities. The company has also been trying experiments to integrate robots in these centers to improve on its operational excellence CITATION Nic19 \l 1033 (Shields, 2019). The reason why Amazon is obsessed with operational excellence is that it understands that lack of its compromises service delivery increases operational cost, which is ultimately borne by the customer and, therefore, a threat to its first principle of customer satisfaction.
Amazon likes to think long term. It is one of the differentiating aspects the company has over many other companies it competes with. Amazon was making loses for the first several years before it turned a profit CITATION Jua04 \l 1033 (Perez, 2004). The reason is that the company was reinvesting in improving its business and operations such that it gobbled any revenue in expenses. Bezos was undeterred despite much criticism from the market and shareholders to make the company profitable at the expense of growth and expansion. Finally, his long term thinking paid off, and the company became a dominant player in the e-commerce industry, and it continues to use the same long-term thinking strategy in its programs. At the moment, it is constructing a $1.5 billion airport, which is expected to handle about 100 aircraft to ensure it expands its same-day delivery network CITATION Mar193 \l 1033 (Hanbury, 2019). Most of the company’s strategic thinking pegged on improving its operational excellence, customer obsession, and passion for innovation that has been gobbling up profits. In each of its strategic decisions, Amazon seems to be eyeing long term objectives, and it does not mind the cost or losses it may incur at the moment before it achieves its long-term goals. Amazon best exemplified by its annual shareholders' newsletter, which always comes attached with its 1997 shareholder annual letter detailing their grand plan and that it has not yet achieved its objectives, but it will keep pushing forward to those goals it envisioned more than two decades ago.
4 Amazon’s human resource management policies
The founder's statement can summarize Amazon human resource principles 'I'd rather interview 50 people and not hire anyone than hire the wrong person.' Thus, Amazon has historically developed a culture of rigorous hiring practices. Most of the Amazon workers, except those working in fulfillment centers, undergo several rounds of interviews. 25% of its workforce (non-warehouse workers) do an average of 5 interviews, each lasting 2-3 hours each. The hiring panel is also multi-departmental, and they all weigh in on the suitability of a new hire. The multide...