SOLUTION: uphills and downhills | My Assignment Tutor

Group Case Analysis #2 Challenges of Amazon’s Growth Strategies HRMT44007D Strategic H.R. Competencies Group # 4 Submitted By: Anthony Grose Andrew Vethanayagam Evadny Burke Noha Ghansar Sarah Qasem Submitted to: Dr.Shady Hana Sheridan College April 6, 2021 Table of Contents 1.0 Executive Summary. 3 2.0 Organizational Analysis. 4 2.1 Successful Moves. 4 2.2 Failure Moves. 4 3.0 Organizational Problems. 5 3.1 Problem 1: Business Strategy not aligned. 5 3.2 Problem 2: Marketing and Advertisements. 6 3.3 Problem 3: Customer Enthusiasm.. 7 4.0 Conclusion. 8 5.0 References. 9 1.0 Executive Summary A business has uphills and downhills the success of Amazon follows this same cycle. In 1994 Jeff Bezos had started his company Amazon, which was just an online book store. With a net worth of 1.6 trillion dollars, this global business stands at one of the highest peaks of business. However, Amazon did not get there overnight, facing many problems that interconnected with one another Amazon needed to know when to cut the ties and when to keep going. The following report is intended to provide the board with a background summary of Amazon’s three significant problems that the consulting team has identified—looking towards its successes through organization analysis and focusing in more depth on its organizational failures. Although Amazon has tried its hand in almost every service known to us, not all of them stuck around. With different attempts at different industries, Amazon has seen some challenges arise with common issues following them. Four central business ideas that have come to pass for Amazon include Amazon Auctions competing with eBay, A9 Engine set to compete with Google, Endless.com to represent the fast fashion market and Amazon Fire phone designed to tackle the smartphone industry. Within these four business models consisted three significant challenges that Amazon failed to notice and led to the downfall of these four projects. Having strived away from the original business strategy, evidence was found that Amazon auction lacked sufficient customer interest and ease compared to the already built eBay. Advertising and marketing were also not done according to reflect the target demographic of customers aimed in the smartphone and fast fashion industry which also lead to lack of customer interest and eventually unable to make net gain due to long term organization cost of the industries. The last challenge that Amazon faced was customer enthusiasm and engagement. A common trait found in the failure of the four projects was that Amazon did not research, market, and plan out their products to use the customers who were invested in them. It became a situation where Amazon could not compete with already established industries and needed to step away from those markets. This report will provide proper evidence that details why Amazon faced those three challenges with the four industries as a consulting team. All great businesses have a starting point, they have high moments and low moments, but through determination and results, the business can succeed, just like in the case of Amazon. 2.0 Organizational Analysis Jeff Bezos’s career started as sr. Vice president at the hedge fund named D.E; In 1994, Bezos took the opportunity to open his company and left the firm taking advantage of the web growth, listing books to be sold online (Hartmans, 2021). Amazon started in a garage, challenging brick and mortar stores as it offered more convenience to shoppers purchasing online (Chan Kim et al., 2019). The majority of books on Amazon were cheaper than retailers, and customers did not have to pay tax on online purchases (Chan Kim et al., 2019). By 1997 Amazon platform had the most extensive customer base, high brand awareness and tremendous bargaining power (Chan Kim et al., 2019). 2.1 Successful Moves In 2000 Amazon expanded its product line to “everything store” and obtained various companies selling their products online Marketplace; this accounted for 6% of revenues in 2000 (Chan Kim et al., 2019).In 2006 Amazon began to keep vendors’ products for free in the warehouse, which helped grow sales in accounting for 26 % in 2007 to over 40% in 2013(Chan Kim et al., 2019). In 2005 Amazon prime redefined loyalty programs by shipping options and costs. Following that, in 2011, Amazon added more services to members such as streaming services, music and books. In 2017, Prime members accounted for 64 % of households, spending on average more than 1.83 % than non-members. In 2016, Amazon launched Prime Air, delivering parcels within the U.S. more effectively and testing drones for package deliveries (Chan Kim et al., 2019). Amazon web services (AWS) have come a long way since 2006, introducing two products to store and access unlimited amounts of data. By 2015 AWS had gained market dominance having over 70 I.T. services and became one of the most profitable Amazon divisions (Chan Kim et al., 2019). In 2007 Amazon launched Kindle, an update to the original “Fiona,” the e-book reader offering a lower product than its competitors, selling 250,000 in the first year—making 2.5 billion from e-book sales(Chan Kim et al., 2019). Kindle owners purchased 2.7 times more than they purchased printed books; e-books accounted for 23% of U.S. trade publishers in 2012 (Chan Kim et al., 2019). 2.2 Failure Moves Amazon had significant growth, and with continuous growth, the company wanted to dominate every sector. Starting with auction websites like eBay, Amazon invested $ 25 million in the online auction and bidding system(Chan Kim et al., 2019). By November 2004, Amazon Auctions was discontinued due to lack of customer interest, no marketing or advertising, and the table was not visible (Chan Kim et al., 2019). Another was in 2013; Amazon launched a search engine, A9, to compete with Google. After two years, the search engine function was terminated, representing 0.1% of all searches. Some of the factors are confusing interface, flat traffic growth and poor performance( Chan Kim et al., 2019 ). The next launch was Endless.com, an online clothing retailer for women. In the first two years, Amazon invested $150 million to beat Zappos, a big competitor (Chan Kim et al., 2019). Unfortunately, this did not happen as Endless.com could never attract traffic and gain market share closed in 2012(Chan Kim et al., 2019). In 2010, Amazon bought Zappos for 1.2 billion and merged the site into Amzaon.com/fashion (Chan Kim et al., 2019). Lastly was the launch of the Fire phone “Tyto” due to the latest success of Kindle e-reader Bezos invested $170 million on a smartphone that did not do well in the market, accounting for the most significant loss valued at $ 83 million unsold phones. Even with the losses, Amazon was ranked 9th globally with a value of $ 280 billion in 2016 (Chan Kim et al., 2019). 3.0 Organizational Problems The following section will discuss the organizational problems that Amazon has met along its path. Although the company is one of the most successful organizations globally, there are some areas where the organization was lacking. It is taught that for H.R. professionals to be successful, one of the nine competencies they must possess is Strategic Architect. By definition, this means to be well-versed “in the underlying principles of form and function, style and structure” (Dave Ulrich et al., 2008 pg. 127). In simpler terms, this means having an in-depth appreciation and understanding of the company’s portfolio while also understanding the customer’s perspective and how the company can make itself distinct in their customer’s eyes. Amazon had a few organizational failures, some of them being the Amazon Auction, the A9 search engine, and the Fire phone. 3.1 Problem 1: Business Strategy not aligned It can be concluded that one of the factors where the organization was lacking with Amazon Auction was creating sustaining strategic agility. Although Amazon had successfully identified the current market trend of auctioning, it failed to align a business strategy to combat that trend. It is important to note that not every trend needs to be followed with a cutting-edge approach, significantly if the wrong edges are cut. This was the case with the introduction of Amazon Auction. At first glance, it may seem that Amazon is doing what every good business should do, take up any opportunity where there is potential. However, Amazon did not realize that it was straying away from its original strategic direction, offering a superior customer experience with fast and easy checkout (Chan Kim et al., 2019). The organization failed to address the consumer’s initial lack of knowledge of traditional auction formats. This is because Amazon had successfully created a style of searching for products through their easy-to-use website. Introducing a bidding system was not something the customers enjoyed as it did not provide the same ease and comfort they were used to. This led to frustrated users leaving to opt for instant-purchase marketplaces to buy at a fixed price. Another factor where Amazon Auction fell short in regards to sustaining strategic agility was engaging customers. Engaging customers involves eliminating processes that add little to no value to the customer (Dave Ulrich et al., 2008 pg. 128). From the data provided in the case, not only did the majority of the users fail to notice the “Auctions” tab, existing users and buyers saw no additional utility making the switch from eBay to Amazon Auctions. Customers found that they could skip the hassle of auctioning and purchase the items through Amazon’s one-click feature, making auctioning an unnecessary extra step. 3.2 Problem 2: Marketing and Advertisements Since 1999, Amazon has been launching products, websites, auctions and web-based technologies. Amazon launched these different services and products to stay competitive and relevant to sustain business longevity. Amazon’s organization has to depend on the customers’ needs as many of the featured launches never revolved around any marketing or advertising. Amazon never considered marketing, advertising, or any informative data based on the products as most of the failures were due to “lack of customer interest, and no market or advertising” ( Chan Kim et al., 2019 ). Amazon has high technology and web design in the e-commerce market. Amazon’s technology advancement strength should be used to create more brand awareness and product/ service launches. Especially in marketing and advertising their products and services on social media platforms. Advertisements and marketing strategies would help with the failures that have happened in the past at Amazon. Which was shown in all of ineffective creations and launches where marketing and advertisements were not done. Overall affecting them which was seen in the auction, A9 search engine, Endless.com women apparel and the most significant loss of $83 million lost in sales was the Fire phone (Chan Kim et al., 2019). Different marketing and advertisements for new launches would have brought consumer awareness, buyer enthusiasm, and more consumers. This would build and sustain more sales in launching products as customers will have more brand awareness and understanding of the advancements that Amazon is focusing on in their innovation of products and services to maximize their products, service and organization. 3.3 Problem 3: Customer Enthusiasm The launch of Amazon’s A9 search engine to key into the market share enjoyed by companies such as Google and Yahoo failed to consider user preferences and ultimately failed due to this aspect. In this regard, the proposed benefit of an open and advanced field restriction tool seemed bulky and hard to use by traditional search engine consumers. The general lack of interest in this search engine’s core capabilities became a significant factor in a stagnating user base. To further compound this functional error, consumers also became increasingly worried about search engine monitoring functions and limited use of the search engine entirely. In the fast-fashion model’s initial advent, Amazon’s attempt at breaking into this space became known as a separate organization called Endless.com. This push gave ground due to incredible investments of $150 million and an initial $30 million in infrastructure building, yet Endless.com failed to generate significant consumer interest over current market leaders (Chan, Kim., et al., 2019). While consumers enjoyed the products, low-price guarantee, and overnight shipping, these significant offerings bled heavily into operational profits. While this continued, the organization failed to generate market appeal, resulting in new clientele base growth not occurring at rates needed to sustain heavy operational losses long-term. The launch of Amazon’s Fire Phone to sequester some of the growing market shares in the smartphone industry failed due to a lack of understanding of device functionality. In this sense, the organization could not correctly analyze consumer interests in specific smartphone elements before launch. It is noted that consumers found no relevant value in both the Dynamic Perspective and Firefly, instead opting to ignore these functions outright (Chan, Kim., et al., 2019). This error is further compounded by the software’s quality, application pool, and update infrastructure behind it. Consumers felt limited by slow software, slow to release patching updates and the small pool of available applications within the in-house app store. 4.0 Conclusion 5.0 References Chan Kim, W., Mauborgne, R., & Young Koo, O. (2019). Successes and Failures of Amazon’s Growth Strategies: Causes and Consequences: Harvard business publishing Education. Retrieved fromhttps://hbsp.harvard.edu/download?url=%2Fcourses%2F801112%2Fitems%2FIN1397-PDF-ENG%2Fcontent&metadata=e30%3D Hartmans, A. (2021, February 02). Jeff Bezos is stepping down as AMAZON CEO. Here’s how he BUILT Amazon into a $1.56 trillion company and became the world’s richest person: Business Insider. Retrieved fromhttps://www.businessinsider.com/amazon-ceo-jeff-bezos-richest-man-world-career-life-story-2017-7#and-so-amazon-was-born-mackenzie-and-jeff-flew-to-texas-to-borrow-a-car-from-his-father-and-then-they-drove-to-seattle-bezos-was-making-revenue-projections-in-the-passenger-seat-the-whole-way-through-the-couple-did-stop-to-watch-the-sunrise-at-the-grand-canyon-16 Laugessen, J. (2019). Business Information Systems [Class Discussion]. Slate PowerPoint: Retrieved fromhttps://slate.sheridancollege.ca/d2l/home and Evadny Burke Final Exam Notes Ulrich, D., Brockbank, W., & Johnson, D. (2008). H.R. Competencies: Mastery at the Intersection of People and Business. Society for Human Resource Management.