Question 2(11 marks)

In Week 5 Interactive Tutorial, we have discussed the case study on "Amazon.com.". This case is available on the Blackboard [see Appendix_Week_5_Tutorial_Amazon.com_Case]. Read this case and answer Question a and b

a)Discuss the rare and valuable resources of Amazon? In what value creation activities are these resources located? [7 Marks. Word Limit: Up to 200 words]

b)How sustainable is Amazon's competitive position in the online retail business? [4 Marks. Word Limit: Up to 100 words]

Holm X Cont: X Bb 1588 X Bb 1588 X C Ques X * Hom X C Ques X C Ques X Para X C Ques X G First x C On 1 x + X C learn-ap-southeast-2-prod-fleet01-xythos.content.blackboardcdn.com/5bfdd02798410/1588809?X-Blackboard-Expiration=16238340000008X-Blackboard-Signature=bU... C Paused 1588809 100% + Amazon.Com When Jeff Bezos founded Amazon.com in 1995, the Amazon offers customers a much wider selec- online retailer focused just on selling books. Music tion of merchandise than they can find in a physical and videos were soon added to the mix. Today, you store, and does so at a low price. Online shopping can purchase a wide range of media and general- and purchasing is made easy with a user-friendly in- merchandise products from Amazon, which is now terface, product recommendations, customer wish the world's largest online retailer, with over $85 bil- lists, and a one-click purchasing option for repeat lion in annual sales. According to Bezos, Amazon's customers. The percentage of traffic that Amazon success is based on three core factors: a relentless gets from search engines such as Google has been focus on delivering value to customers, operating falling for several years, whereas other online retail- efficiencies, and a willingness to innovate. ers are becoming more dependent on third-party Activate Windows Chapter 4 Competitive Advantage Through Functional-level Strategies 141 Go to Settings to activate Windows. Type here to search O A 9 P 14'C Partly cloudy ~ 2:28 PM 6/16/2021Holm X Cont: X Bb 1588 X Bb 1588 X C Ques X * Hom x C Ques X C Ques X Para X C Ques X G First X C On 1 x + X C learn-ap-southeast-2-prod-fleet01-xythos.content.blackboardcdn.com/5bfdd02798410/1588809?X-Blackboard-Expiration=16238340000008X-Blackboard-Signature=bU... C Paused 1588809 1 2 100% + Jet search engines. This indicates that Amazon is in- and instead focus on automating Amazon's dis- of- creasingly becoming the starting point for online tribution centers. Kiva robots pick products from jor purchases. As a result, its active customer base is shelves and deliver them to packing stations. This now approaching 250 million. reduces the staff needed per distribution center by To deliver products to customers quickly and 30 to 40%, and boosts productivity accordingly. Ier ve accurately, Amazon has been investing heavily in a On the innovation front, Amazon has been a it. network of distribution centers. In the United States leader in pushing the digitalization of media. Its in- ch alone there are now over 40 such centers. Sophisti- vention of the Kindle digital reader, and the ability :US cated software analyzes customer purchasing pat- of customers to use that reader either on a dedicated rik terns and informs the company what to order, where Kindle device or on a general-purpose device such m- to store it in the distribution network, what to charge as an iPad, turbocharged the digital distribution of m- for it, and when to mark it down to shift it. The goal books-a market segment where Amazon is the clear is to reduce inventory-holding costs while always hav- leader. Digitalization of books is disrupting the es- ng ing product in stock. The increasingly dense network tablished book-retailing industry and strengthening of distribution centers enables Amazon to reduce the Amazon's advantage in this segment. To store digital time it takes to deliver products to consumers and to media, from books to films and music, and to enable cut down on delivery costs. As Amazon grows it can rapid customer download, Amazon has built huge support a denser distribution network, which it turn server farms. Its early investment in "cloud-based" in- . .. .... enables it to fulfill customer orders more rapidly and frastructure has turned Amazon into a leader in this at a lower cost, thereby solidifying its competitive ad- field. It is now leveraging its expertise and infrastruc al- vantage over smaller rivals. ture to build another business, Amazon Web Services To make its distribution centers even more (AWS), which will host websites, data, and associated ed efficient, Amazon is embracing automation. Until software for other companies. In 2014, this new busi- recently, most picking and packing of products at ness generated over $2.5 billion in revenues, making on Amazon distribution centers was done by hand, Amazon one of the early leaders in the emerging field with employees walking as much as 20 miles per of cloud computing. Jeff Bezos is on record as stating shift to pick merchandise off shelves and bring it to that he believes AWS will ultimately match Amazon's packing stations. Although walking 20 miles a day online retail business in sales volume. may be good for the physical health of employees, it represents much wasted time and hurts produc- Sources: "Amazon to Add 18 New Distribution Centers," Supply tivity. In 2012, Amazon purchased Kiva, a leading Chain Digest, August 7, 2012; A. Lashinsky, "Jeff Bezos: The Ultimate Disrupter," Fortune, December 3, 2012, pp. 34-41; S. Banker, "The manufacturer of robots that service warehouses. New Amazon Distribution Model," Logistics Viewpoints, August 6, Activate Windows Post the acquisition, Kiva announced that, for the 2012; G. A. Fowler, "Holiday Hiring Call: People Vs Robots," The Wall Street Journal, December 10, 2010, p. B1. Go to Settings to activate Windows. next 2 to 3 years, it would take no external orders Type here to search O WE A 9 14'C Partly cloudy ~ 2:28 PM 6/16/2021