The author states in his work that Amazon uses variance analysis of deviations as a financial analyst. This approach has several disadvantages that should mention. The biggest disadvantage of using variance analysis is that it can be affected by outliers and extreme values. The standard deviation assumes a normal distribution and calculates all uncertainty as a risk. I hope the author understands this and tries to conduct a more detailed analysis. With its help, it is possible to identify the need for changes in the overall business strategy and management problems.
The author correctly reveals the general idea of cost reduction and possible steps to implement this strategy. However, it should add that before developing a cost reduction strategy, it is necessary to establish a systematic accounting of expenses in all areas of the company and its divisions. To do this, it is necessary to control the use of resources, normalize expenses and find out the reasons for the growth of excess spending to liquidate them later. Then the company must select the costs that most affect profits and determine which of them can be reduced without compromising production activities. It is important for accounting, which should function simultaneously in all Amazon departments.
Further, the author touches on “zero defect,” but its implementation is practically impossible. Striving to achieve a “zero indicator” does not help and does not motivate the team to do better (Silvio, 2018). In addition, the absence of defects is statistically impossible since the cost of production will be prohibitively high. Not all defects are equal, so it is important to identify those that affect customers (Silvio, 2018). These defects need to be eliminated to reasonably improve the product or process. It is unreasonable to eliminate all defects, so it is important to strive to be better every day and make the client happy. The firm’s efforts to make the client happy will feel. A culture of improvement will create, and the company and its shareholders will benefit.
Reference
Silvio, M. B. (2018). Planned Obsolescence, Total Quality, Zero Defects and Global Competition. Symphonya, 7(2), 8-20.