One of the most amazing success stories in the late 20th century is the creation of Amazon.com. This is made more remarkable with the fact that its founder Jeff Bezos had to deal with a rapidly evolving technology as well as the fact that the dotcom bubble has caused many companies to crash and burn.
The mere fact that Bezos was able to build a company from scratch and transformed it into a dominant force in the online retail industry is worthy of scrutiny. The following is a critical assessment of a collaborative analysis conducted by a group of students.
The Key Success Factors
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The group was able to pinpoint the main reason why Amazon.com succeeded where others had failed. As compared to majority of the start-ups that failed to become profitable and could not go beyond the hype, this company was able to determine some of the key areas that corporate management had to focus on.
These areas are all related to the design of the website and how intuitive it was to respond quickly to the needs of the customers. For example, it was pointed out that Amazon.com’s success is also rooted on the fact that they created “a platform for commerce … a place for consumers to find and discover anything they might want to buy” (Leschly, Roberts, & Sahlman, 2010, p.12). The success of the company was also linked to the different types of synergies that it was able to develop with other companies.
The presence of sophisticated security protocols are indeed important but if the company ignored the need for usability then it would have been doubtful if Amazon.com could have distanced itself far away from the rest of the competition (Leschly, Roberts, & Sahlman, 2010). It is therefore crucial that the group pointed this out as part of the critical success factors that have made this company a phenomenon in the field of online retailing.
Although the group succeeded in providing the main reasons why the website of the company was such a hit with the customers they did not go beyond that particular scope of analysis. They should have gone beyond it because Amazon.com is a force to reckon with in the e-commerce world due to many reasons and it is not just because they have a great website.
This has been made clear in Activity 1.2: The importance of External Analysis wherein team members saw a video clip of Paul Skinner, the former CEO of Rio Tinto. In that particular video Skinner underscored the importance of monitoring the business environment.
Building the correct website is something that many people are aware about. Although it is a critical component in any virtual commerce hub it is not a secret that is known to only a few tech-savvy individuals. For instance no one can say that the creators of Napster built a flawed website and that is the reason why it has to close down. In the same manner AOL is not plagued with problems because the corporate leaders were unaware that they have to invest in creating a presentable, easy-to-use, and secure website.
The group should have discussed more fully the history of e-commerce and online retailing in order to appreciate the challenges faced by Amazon.com during its fledgling years in the business. Before going any further it must be made clear that Amazon.com succeeded in doing one thing only.
This should have been highlighted by the group. The group simply focused on the obvious steps necessary to compete in a highly competitive industry (Mitchell, Agle, & Wood, 1997, p.90). Others are doing most of the same things that Jeff Bezos and his team were doing and yet there was only a few companies left standing after the dotcom bubble was exposed.
Aside from reducing overhead while improving the efficiency of delivery of products the group should have pointed out that Jeff Bezos chose book retailing as the foundation for his business. In the report there should have been an insightful analysis why this is a crucial decision (The Open University, 2010, p.4).
The answer could perhaps be discovered if this company is compared with Napster or a communication company like AOL. The group should find an explanation as to why it was critical to design the company this way and what were its implications in the context of online retailing.
Ways to Improve
The group focused more on the internal aspects of the business. This is seen in the discussion regarding the key success factors of Amazon.com as well as the use of the SWOT analysis. The success factors are mostly focused on the inner-workings of the company (Porter, 2008).
As mentioned earlier much space was devoted in discussing technology issues and how the company spent a great deal of time and effort in improving their system. But without the ability to understand the business environment they are in the business organization could never have survived the fast-paced world of e-commerce (Prahalad & Hamel, 1990, p.32).
The SWOT analysis could have given the group the opportunity to have an external worldview of the company and judge it in the bigger scheme of things. One way to do this is to know more about the various stakeholders in a particular industry. More importantly it is imperative to find out the “power and legitimacy” of the various stakeholders (Mitchell, Agle, & Wood, 1997, p.91).
But the group members decided to devote little effort in this regard. When the group decided to look into the opportunities and threats components of the SWOT analysis there was not much external analysis that was undertaken. In fact, the group was contented in providing generalizations and at times provided assertions that were not backed up by evidence. If there was indeed evidence to back up their claim this was not discussed extensively in the report.
In the part where the group discussed about opportunities and threats there was still no detailed discussion as to the effect of competitors and other external factors to the company. The impact of 9/11 terror attacks was briefly mentioned but it is an event that affected everyone not only Amazon.com but also its competitors.
It does not provide any significant information with regards to the success of the company compared to its competitors and other forces acting on it. The group should have also discussed the importance of core competencies “the collective learning in the organization” (Prahalad & Hamel, 1990, p.32).
It has to be reiterated that certain weaknesses in the collaborative analysis make it appear as if there are contradictions in the report. For instance, in the conclusion part, the group seems to imply that Amazon.com need not worry with any impending problem in the future. However, in the SWOT analysis it also says that there is a host of e-commerce sites springing ready to challenge the reign of Amazon.com.
It was also mentioned earlier that the website for this particular company has proven to be stable and secure. But in the SWOT analysis it also states there that the company is susceptible to hacking. These are contradictory statement. It is troubling to find these kinds of statements because those who may read this report may conclude that the group is making generalizations without having the ability to prove their claim.
It is possible however that there is an explanation to these seemingly confusing statements but the group has to revisit the report and explain it in a much better way. The group has to clarify why they say that the company’s website is secure and yet susceptible to hacking. The group has to explain even further why the company is profitable and sustainable and yet it is threatened by new e-commerce sites.
One of the most important changes that can be made with regards to the collaborative analysis report is to look into the failures of other online retailers. This can provide a clues and other pertinent information as to the success of the company. It will also reveal the possible pitfalls that have to be avoided, for example AOL was a promising company but now its corporate leaders are faced with many problems.
Conclusion
The collaborative analysis was able to achieve most of the objectives that the members had set out to do before the activity started. The group wanted to find out why Amazon.com was able to sustain its incredible growth during a season when notable companies like AOL and highly popular ones like Napster had fallen on the wayside.
The group was correct in focusing on key success factors that are usually associated with e-commerce. The group further clarified their approach by highlighting the fact that Amazon.com created an outstanding website that is easy to use secure and reliable.
This is a good approach, however, a truly exhaustive analysis of Amazon.com and the root cause of its success would not be complete if done only in the technology level. The group should have also discussed other areas of the business especially when it comes to the business model that Jeff Bezos chose for his company that made all the difference.
References
Leschly, S., M. J. Roberts, & W. A. Sahlman (2010). Amazon.com – 2002′. In M. Keynes (Ed.). Block 4 – Collaborative analysis. Milton Keynes: The Open University.
Mitchell, R. K., B. R. Agle, & D.I. Wood (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. Academy of Management Review. 22(4): 853–886.
Prahalad, C. K. & G. Hamel (1990). The Core Competence of the Corporation. Harvard Business Review. May–June: 79–91.
Porter, M. E. (2008). The Five Competitive Forces That Shape Strategy. Harvard Business Review. January: 78–93. The Open University (2010). B301 Making sense of strategy. In M. Keynes (Ed.). Block 3 – The Strategy Toolkit. Milton Keynes: The Open University