Structure, Objective and Aim of Business Organization
For this task, I have taken Amazon.com organization as a case to analyze and investigate below questions
Analysis of Business Organization
Amazon.Com is a leading online retailer company, offering for sale different items such as books, music, DVDs, videos, toys, electronics, software, video games and home improvement products serving almost 22.5 million customers over 150 different countries. This company was founded in July 1995 by Jeff Bezos in the state of Washington USA. Jeff Bezos now 37 years old, received his BS in Electrical Engineering and Computer Science from Princeton University. His professional career started at Bankers Trust Company in 1988, where he became Vice President in February 1990. At the end of the same year he moved to D.E. Shaw & Co. a Wall Street investment firm, becoming Senior Vice President in 1992. In those early years for the Internet retail business, Mr. Bezos noticed an important opportunity on the online commerce. He made a list of possible products that could be sold on line, including books, magazines, music, among others and finally he decided to start selling books.
The main reasons of his choice were because there are more books to sell than music titles and also because the book publishing industry is more accessible than the music industry, mainly controlled by half a dozen of big record companies. With a dream in hand he quitted his job in June 1994 and moved to the West, choosing Seattle as starting point because its proximity to a major book distributor, Ingram’s Warehouse in Oregon. This is how the company that took its name from the river with the biggest water flow of the world started in a garage downtown Seattle with four employees, to be the biggest flow of e-commerce book retail.
Products and Services
Amazon.com business is in some sense simpler than the usual book retailer firm. No investment in costly point of sales, small inventories, better client support, no long queues to pay or return books, etc. These are some of the advantages with respect to the “real world” commerce activities. In addition to this, customers can search at home a database of millions books, CD’s, DVDs, videos, software, video games, lawn products and even a pan for your kitchen. If you find the item you want, just add it to the shopping cart and then is needed to fill out an online form to specify the type of payment, shipment characteristics and even if it’s a gift, the type and color of wrapping paper. Also today it is possible to access used and collectible items through their zShops and Amazon Commerce Network (ACN)[1] or going to Amazon Auctions or sothebys.amazon.com.
The first of the products offered by Amazon.com were books, as we early noted, starting in July 1995. Then music and DVD/Video were added in 1998. In March 1999, they introduced Amazon.com Auctions including today sothebys.amazon.com and zShops. Other retailing businesses in development are electronics, toys, home improvement, software and video games. This broader spectrum of products and services is related with the company goal of being the most customer-centric firm where customers can find and buy anything they may want on line.
With so many different products and services, Amazon has a divisional structure. In a divisional structure, different departments for different products and services allow department heads to appropriately focus their resources and results, as well as monitor the organization’s performance. This structure is best for such a large organization because it is the most flexible.
Amazon’s organizational structure is comprised of CEO and founder Jeffery Bezos (pictured above) and an eight-member board of directors. The CEO oversees the Chief Financial Officer (CFO), the Chief Technology Officer and the following 8 departments: Business Development, eCommerce Platform, International Retail, North America Retail, Web Services, Digital Media, Legal & Secretary, and Kindle. The CFO oversees the Real Estate and Control department. International Retail oversees three separate departments: China, Europe and India. North America Retail oversees the following five departments: Seller Services, Operations, Toys, Sports & Home Improvement, Amazon Publishing and Music & Video. The Web Services department oversees Amazon S3 and Database Services. Other departments include Product Development & Studios, Europe Operations, Global Advertising Sales, Computing Services, and Global Customer Fulfilment.
Industry and Growth Policy Overview
Amazon.com is rated as a company in the Internet software and services industry into the technology sector. The most important competitors for Amazon.com are E-Bay (on-line auctions and retail sales), Barnes and Noble (books sales and other products) and CDnow (on-line music retailer). In general, financial results for the Internet Company’s sector are like Amazon’s with some exceptions. One of the main characteristics of this sector is that almost all companies show strong revenues and increasing losses.
Since 1998, Amazon.com started an aggressive expansion policy sustained by the extraordinary amount of resources obtained from the huge market capitalization of the company. This situation allowed Amazon.com to acquire several small and medium Internet companies in order to support the process of forming a technological and customer base for future operations. In the US market the most important variable of growth has been the introduction of several new products and services beyond the typical sales of books, videos and music. This couples with the company goal of being the place where customers can search and buy anything they may want in the Internet.
The company’s international expansion has been also very important in the recent years. The first international Web Site of Amazon.com was launched simultaneously in Germany and United Kingdom in October 1998. These two Internet sites are positioned as number one sites of Internet sales in their respective countries. Recently, two new Web Sites were launched in France (August 31, 2000) and Japan (November 01, 2000). This process of international growth is expected to continue opening new Web Sites or arranging partnerships with local providers.
The E-Commerce Accounting
With Internet a new economy started to grow, the cyber economy or simply e-commerce. This technological revolution is changing the old paradigms about the workings of economics and furthermore our life styles. As happened in the early years of the Industrial Revolution, some firms made a protagonist role in showing the wealth and power of this “revolution”. Today the history seems to return to a new starting point but we must be aware that new changes in the economic structure have important costs of reallocation and assimilation that are particularly important in the early stages where we are right. One of these firms leading the e-commerce business revolution today is Amazon.com. But what is behind this prosperous firm in the stock market? It is so productive and profitable as the tradional firms? What are the rules that are going to follow the new firms compared with the older ones? Taking a look into the financial and accounting information of this firm we will answer many of these questions.
All the traditional accounting and financial analysis at least from the investor’s point of view is mainly focused on a strong profit account, low debt, liquidity, assets turnover and so on.
Amazon.com Web Site Changes in time
As Amazon grows and its web site too, below are the time to time changes in Web site
QUALITY CONTROLS
So Bezos is trying something that no other retailer has been able to pull off: He wants to bring the quality of service from Amazon’s outside merchants up to the same level as its own. The company has long let customers rate their experience with merchants, as they can on eBay. But Amazon also has instituted many internal safeguards to track the behaviour of merchants. For instance, retailers have to use an e-mail service on the Amazon site to communicate with customers so Amazon can monitor conversations. The company also uses metrics such as how frequently customers complain about a merchant and how often a merchant cancels an order because the product isn’t in stock. Partners who have problems with more than 1% of their orders can get booted off the site.
To refine the experience with outside merchants, Amazon in 2006 launched an initiative called Fulfilment by Amazon. Merchants simply send boxes of their products to Amazon’s warehouses, and Amazon does the rest. It takes the orders online, packs the box, answers questions, and processes returns. Last quarter, Amazon shipped 3 million units for Fulfilment by Amazon partners, up from 500,000 a year earlier.
Though Amazon charges the merchants, Bezos says that’s not why it launched the service. “It’s important because it improves the consumer experience so much,” he says. “It doesn’t make us more money; it’s heavy lifting. If you think long-term, I think it’s very important for us.” It might seem counterintuitive to help small merchants, including ones that undercut you, be more competitive. But for Amazon, the ultimate goal is to gain more control over the shopping experience, making it more consistent and reliable. The idea is that more people will use the online retailer and spend more.
Michael DuGally runs NorAm International Partners, a used book, DVD, and video game reseller in Hudson, Mass. He signed up for the program a few months ago. “I can’t deliver the kind of customer experience that Amazon can,” says DuGally. For instance, Amazon’s customer service people are trained to provide consistent answers, while NorAm’s four service employees often provide different responses, DuGally says. Amazon’s people are drilled in what steps to follow when they get everyday questions, like “Where’s my package?” as well as fielding more unusual requests. Amazon’s people tend to be more prepared than most, because they try to answer customer questions through e-mail or a service where customers enter their phone numbers and wait for a call back after Amazon’s reps have gathered data on them. (There is an 800 number to call Amazon, but it’s not easy to find on the Web site.) To make sure that everyone at Amazon understands how customer service works, each employee, even Bezos, spends two days on the service desk every two years. “It’s both fun and useful,” says Bezos. “One call I took many years ago was from a customer who had bought 11 things from 11 sellers — and typed in the wrong shipping address.”
DuGally says that Fulfilment by Amazon produces results. He says that sales are up 40% on the items he sells through the program, and return rates are down 70%. He also expects to save between $550,000 and $700,000 this year, primarily because Amazon can negotiate lower shipping rates.
TAKING THE WHEEL
Amazon has gotten many ideas from trying to address customer complaints. One gripe from years past was that popular items — think Tickle Me Elmo or Crocs (CROX) Mammoth clog shoes — were at times out of stock. The last thing Amazon wants is for a frustrated shopper to then head to another site or the mall.
During the past two years, Amazon developed new programs to keep hot items in stock and ready for quick delivery. One initiative is something Amazon calls the Milk Run. Instead of waiting for suppliers to deliver to Amazon’s warehouses, Amazon sends its own trucks out to pick up top-selling goods. That reduces the number of late or incomplete orders the company receives. The program is “very forward-thinking,” says Simon Fleming-Wood, vice-president for marketing at Pure Digital Technologies, whose Flip camcorder has been included in weekly Milk Runs.
One of the drawbacks to shopping online, of course, is that people don’t feel the instant gratification of getting their purchases right when they buy them. Albert Ko, an online marketer in Irvine, Calif., always wants his packages as fast as possible. “I’m always pushing them,” he says. That’s one reason Bezos is expanding Amazon Prime, the program for which customers pay $79 a year to get free two-day shipping on many in-stock products. During the past two years, Bezos has taken it international and increased the number of products that qualify for Prime. “Our vision is to have every item made anywhere in the world in stock and available for free two-day delivery,” he says.
Still, as carefully as Amazon plots and plans, sometimes things go wrong. Last November, 23-year-old Lindsey Smolan splurged on an iPod and a pink case from Amazon. The iPod arrived, but the case didn’t. Two weeks later, Smolan e-mailed Amazon and asked for a refund. After a little thought, she e-mailed again, asking for a free cover. “I didn’t use my iPod because I was waiting for my case, and I’m a valuable customer,” she says. Amazon agreed. She got the iPod case gratis.
Business Exchange: Read, save, and add content on BW’s new Web 2.0 topic network
Core Business Functions of Amazon
Amazon Core Business function is taking a good while to fulfil its promise. It has grown from books to products in 35 categories, but most of the original elements of the business model are intact: attract customers with a deep inventory that no retail store can match, offer discounted prices, provide easy navigation and whisk customers through a trouble-free checkout process that is the best in the business.
Its Core Business Functions is
· Online Retailing of Multiple category products to the customer i.e. sourcing and pricing their products, Delivering and Better Customer Service.
· Internet services, and
Amazon’s internet services cannot easily be discussed as a standalone line of business because it is deeply intertwined with both its retail business and the Kindle ecosystem. From the consumer perspective, Amazon has begun to provide services like Amazon Prime, which provides free two-day shipping on retail purchases, on-demand video streaming, and free access to the Kindle library, all for an annual fee. Amazon Prime overlays the subscription and all you can eat business models with the retail model to provide additional customer value.
· The Kindle ecosystem.
Amazon has expanded its business into manufacturing and distributing the family of Kindle tablets. Originally designed as an electronic book reader (supplementing its online book seller business), the Kindle has become a fully functional tablet and media device. With the Kindle, Amazon serves as both manufacturer and traditional retailer (and also wholesaler by selling the device through other retailers).
Amazon.com started business in highly competitive electronic commerce market at a time when few people trusted purchasing items online. Additionally, the Amazon business model was discounted as not viable. If they had continued to be strictly an e-commerce company then this might have been the case. Amazon, however, has continually evolved their business model to adapt with changing market conditions.
Additionally, they have been extremely successful in leveraging existing resources to the maximum.
Get best assignment help to score good marks. Our team of writers and scholars is expert in writing plagiarism free content. Get affordable Homework Help at Assignment Help Australia.
