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Part 1) An overall analysis of the business of Amazon Australia (10 marks): In this part of the assignment, you will analyse the overall business of Amazon Australia by addressing the following requirements:

  1. a) Provide information about Amazon Australia and locate relevant information about its strategy, how it competes in the market, and its operations.
  2. b) Describe the organisational form of Amazon Australia using Mintzberg’s classification.
  3. c) Present the value chain of Amazon Australia using Porter’s Value Chain Model. List and describe the primary and support activities of Amazon Australia.
  4. d) Analyse the competitive strategy of Amazon Australia using Porter’s competitive forces model.

For each of the five forces, explain if that force is low, medium, or high, and explainwhy.

Part 2) Analysing an existing human activity system that is problematic (18 marks):

In this part of the assignment, you will identify aspects of an existing human activity system within Amazon Australia which is problematic and needs improvement, and answer the questions below:

  1. a) Identify an existing human activity system within Amazon Australia which could be identified by some stakeholders as being problematic and suffering from issues (problems). Also, list the stakeholders of this human activity system and define their roles.
  2. b) Draw a rich picture showing the issues and the concerns of the stakeholders you haveidentified.
  3. c) Draw a process model using the BPM notation for the process of the existing human activity system you have identified.
  4. d) Use the DeLone-McLean Model of Information System Success to describe the areas in which the existing human activity system is not successful.
  5. e) Describe measures of success (efficiency, efficacy, and effectiveness) for the existing human activity system identified, and explain using success measures where the HAS fallsshort.

Part 3) Suggesting a new Information System to support the HAS in part 2 (15 marks):

In this part of the assignment, you will suggest a new information system for a specific purpose, which can help Amazon Australia overcome those issues identified in part 2, and perform better. This must be a new or modified information system. Answer the following questions with regards to the new information system:

  1. a) Identify a new information system which can clearly add value to the business of Amazon Australia. Is it a primary or secondary activity according to Porter’s value model? Also, list the likely stakeholders of this new information system and define their roles.
  2. b) Describe the data and information that the new system involves, explain the types of knowledge that the new information system can create, and describe how it can inform decision-making.
  3. c) Draw a process model using the BPM notation for the new information system you have identified.
  4. d) Classify the new information system within Amazon Australia as either: front-end, back-end, customer- facing, or supplier-facing; and explain why.
  5. e) Describe dimensions of impact of your proposed new information system within Amazon Australia for all stakeholders; identify intended and positive effects (and possible negative effects) and describe the proposed impact of the new system on the organisation, groups, and individuals.
  6. f) Describe measures of success (efficiency, efficacy, and effectiveness) for the proposed new information system.

An overall analysis of the business of Amazon Australia

The CEO of Amazon Australia addresses that fact that the existing human activity system (HAS) within the company requires to be improved as the HAS suffers from issues that needs to be analyzed. The CEO demands suggestion for a new information system for a specific purpose which can help Amazon Australia overcome those issues and perform better. The following section initially provides an overview of the Amazon Australia including its business activities, strategies, organizational form as well as analysis of competitive strategy. The second section identifies the existing HAS, followed by issues and concerns of the stakeholders along with reason for which HAS is not successful and description of success measures. The third section suggest about new information system that could improve the existing HAS along with the impact of new information system on business and stakeholders. The fourth and final section provides recommendations and reflection regarding improvement of customer service.

Amazon is an United States (US)-based is an online retailer that started its business in 1994 as online bookstore. Over the years, the company expanded established itself as the first and most successful online retailers in the world (Stone, 2013). Amazon Australia is the online shopping market of Amazon in Australia that was launched in the year 2017 in Melbourne. Its aim is to globalize and gain a place in the international marketplace. The company’s mission is to bring thousands of new jobs to Australia, investment of million dollars and provide the opportunity to Australian businesses for selling at home and abroad through company marketplace (Haucap & Heimeshoff, 2014).

Core Competency:

The core competencies for Amazon are customer accessibility and convenience, numerous options for selection, personalized services, the supremacy of website content, tool with efficient and quality search features for finding the items within one's choice and price. According to customer needs, these core competencies are created for online market development. Also, they makes use of internet technology for handling financial issues for their customers (Böckers, Haucap & Heimeshoff, 2013).  

Strategic/Competitive and First Mover Advantages:

The following strategies of Amazon has led to competitive advantage:

  • Cost-leadership: This strategy establishes a competitive advantage by offering same quality with price lower than market price, which means that strategy focus on lowering the operational cost.
  • Customer differentiation: This strategy focuses on selection of bigger amount than competitors are. This strategy establishes a competitive advantage by understanding the customer needs with co-ordination of company’s value.
  • Focus strategy: Here the above two strategies are applied for focusing the niche customer.

Operational frugality and customer satisfaction are two important values of Amazon that affect positively to competitive advantages. Amazon has invested huge amount of money in its infrastructure development to ensure that during any product buying customer can explore easily. In its economical approach, the company pay less base salary to its employees with respect to its competitors and thus saves cost and utilize it in branding and business expansion. However, employees' loyalty are maintained by distributing company shares among the employees as well as conveying the messages about company’s time of benefit to the employees and also ensures that employees will also be the beneficiary in terms of share (Bharadwaj et al., 2013).        

Amazon Australia’s strategic initiatives consist of targeting multiple categories through technology and information, externally improving the sales volume while internally minimizing the cost.

Amazon Australia keeps the first-mover advantage through partnership with prospective retail business segments and offering more and more products. Amazon Australia’s internet business is a positively growing business also because the sufficient and required information of major selling items is enough to get the objects of customers’ choice. This enhances the trust and loyalty of the customer towards the company (Gomez, Lanzolla & Maicas, 2016).

Description of the organizational form of Amazon Australia using Mintzberg’s classification

According to management theorist Henry Mintzberg, the development or rise of an organization's structure depends on flexibility of the organization’s strategy as well as the surrounding forces that are experienced by it and the characteristics of the organization. If all these fit well together, then their combination enable the organization to perform well. Otherwise, then the organization may face acute problems. According to Mintzberg, understanding of company’s structure defines the suitability of the conditions. Amazon can be classified as divisional or diversified organization as the company has many different product lines and business units. The company here consists of a number of autonomous divisions, which are supported by a central head office. Each division has its unique structure and each of them make its own decisions. The company’s brand varieties, wide range of product manufacturing, or operational activities in different geographical regions form the foundation for an autonomous division (Jeve, 2015).

Maintenance of control and accountability by line managers are the main advantage of a divisional structure. In addition, the decentralized way of daily decision-making allows the core team to have focus on strategic plans, thereby ensuring the necessary support structures are in place.

Replication of resources and activities is one important drawback of the divisional structure. In addition, due to the competency for limited resources from head office there may arise among division. Thus, the division work well only in stable and simple industries.

Thus, the above structure can work well if the product or market diversification is included as part of the company strategy, particularly when the company is too large for effective central decision-making.

Porter’s value chain model is a framework for analytic structure construction that follows associated activities from raw material acquisition or idea through production and finally, into the hands of a customer. Porter’s value chain of Amazon Australia consists of five primary activities, which are operational activity, inbound logistics and outbound logistics activities, marketing and sales activities and service activity. As shown in figure below, support activities are illustrated over all of the primary activities. These are human resources activity, procurement activity, firm infrastructure activity, technology development activity (Boons & Lüdeke-Freund, 2013).

Figure-1 (Amazon Australia’s Value Chain)

Value chain analysis is the tool for analysing the organizational activities for bringing the services and product to the market. The difference between the cost incurred for managing these activities and the customer payment amount for the final service or product is called as profit margin. Profit margins could be increased by reducing the cost of these processes through Information technology (IT). A value chain has primary and supporting activities (Gereffi & Fernandez-Stark, 2016).

Primary activities of Amazon Australia:- These activities consists of taking some raw material and transforming or converting it into something of higher value. The major primary activities are as follows:-

1) Inbound logistics activity– Here raw materials are received from suppliers, saved and moved the raw material. Fulfilment by Amazon (FBA) is the foundation of Amazon Australia’s inbound logistics for retail business which consists of total responsibility for logistics, product return and customer service (Burns, 2016).

Value chain analysis of Amazon Australia using Porter’s Value Chain Model

2) Operational activity – Here raw materials are processed into products. The operations are organized into following three segments:

  • North America segment, where North America-focused websites such as www.amazon.com.mx, www.amazon.com, www.amazon.ca, are operated.
  • International segment, where globally focused websites such as www.amazon.com.au, www.amazon.cn, www.amazon.com.br, and others, are operated.
  • Amazon Web Services (AWS) segment, where global sales service of computing along with storage, database are dealt and other service offerings for academic institutions, government agencies, start-ups, enterprises are also provided (Newcombe et al., 2015).

3) Outbound logistics activity– Here products are send to wholesalers, retailers or directly to customers. Amazon Australia’s outbound logistics integrates the following activities:

  • Provision of worldwide fulfilment centres for better business service and the company uses robotic technology for product picking, shipment as well as managing receipt.
  • Arrangement of co-sourced and outsourced resource.
  • Provision of downloadable digital delivery for products and services from Amazon Australia’s website.
  • Retail stores including whole foods chain (Hazen et al., 2015).

4) Sales and marketing – Marketing is concerned with understanding and communication of the customer requirements as well as promotion of final product. Amazon Australia’s marketing message conveys assurance superior customer services such as providing largest choice of services and products with attractive price features as well as fast delivery of products. Different parts of the mix of marketing communication such as sales advertising through media and print, events and experiences of product marketing and sales promotion along with direct marketing and public relations are utilized in an integrated manner for communicating the marketing message to target customer section (Arnett & Wittmann, 2014).

5) Servicing – Here post-sales support such as installation, training, maintenance, complaints are performed. The company offers exceptional customer services. Moreover, Amazon’s returns process deals with completely online through the account of customer. In case of any issue, then in that case customer can speak and deal over phone with customer service assistant quickly and efficiently (Frasquet, Mollá & Ruiz, 2015)

Support activities of Amazon Australia:-. The major support activities are as follows:-

1) Procurement – Here raw materials and other materials are used in production process are purchased.

2) HR Management – Here recruitment, hiring, firing, training and development are done.

3) Technology Development – Here process automation, software, hardware, equipment and so on for the operation are performed.

4) Infrastructure - It comprises of planning, general management, quality assurance, accounting and finance (Xu & Quaddus, 2013).

Analysis of the competitive strategy of Amazon Australia using Porter’s competitive forces model.

The porter’s five forces model is an analytical model, which is basically used for strategy formulation and which analyses the level of competition as well as the forces that are affecting industry competition. The porter’s five forces analysis of Amazon Australia discusses about how the various forces are shapes the retail industry competition and position of Amazon Australia’s with respect to these forces (E. Dobbs, 2014).

1) Bargaining power of suppliers:

Amazon Australia’s has huge number of suppliers. These suppliers perform business activities according to Amazon Australia’s formed rules as well as the code of conduct. In addition, these suppliers need to follow Amazon Australia’s supply chain standards. However, Amazon Australia enjoys flexibility of switching and/or finding new suppliers. For any product, the company always has several options. By considering all these factors, it is found that the bargaining power of Amazon Australia’s suppliers is low to medium.

2) Bargaining power of buyers:

Amazon Australia’s bargaining power of buyers ranges from medium to high. Amazon Australia primarily focuses on satisfaction of the customer along with quality of the product. The cost of switching for Amazon Australia’s customers are low and the company’s number of competitors has developed in these years. Every customer has enough information regarding online products searching and based on the available information the customer can make his/her choice.

Analysing an existing human activity system that is problematic

3) Threat of substitute products or services:

Amazon Australia’s threat about substitute products is high.  A massive number of other brands have also entered online retail business and people also has option to buy from the physical retailers. Thus, the customers have the option of switching easily from one brand to another. However, besides its brand name and brand value, excellent customer service is the only major competitive advantage of Amazon Australia.

4) Threat of new entrants:

Amazon Australia’s threat of new entrants is low as the many changes in retail industry has been brought by the growth and development of digital technology and the growth has decreased the barriers to entry. However, brand building similar to Amazon Australia is quite difficult due to strategic factors as well as marketing expense and other expenses.

5) Rivalry in the industry:

Amazon Australia’s rivalry level in the industry is high due to extreme competition from the traditional retail brands as well as the growing number of players in online retail market. Therefore, the increase of the competition level for Amazon is unimaginable. Moreover, some companies apply the cost leadership strategy and try to become the cheapest producer in the industry by offering comparable products with cheapest cost at a normal market price. Also, some companies applies a differentiation strategy try to differentiate its products and/or  services by offering better product quality at a premium price as well as better service level to customers.

A human activity system (HAS) is defined as a conceptual system that actually describes intellectual constructs which expresses some human activity with a purpose instead of providing real-world activity descriptions. The system is conceptual as it contains. A HAS is an organized combination of people and other resources for the accomplishment of a purpose. Within the HAS, the people are affected by the system and the system get affected by their participation or involvement. People within the HAS individually and collectively choose and carry out activities for the attainment of the collectively identified purpose (Morales et al., 2014).  In Amazon Australia company, customer service is the HAS which is identified by stakeholders as problematic and needs to be improved.

Internal and External stakeholders:-

According to West & Bogers (2014), irrespective of its nature, purpose, structure and size every organization has its stakeholders. Any person or entity, who influence the company activities or being influenced by the company’s activities are referred to as stakeholders. In any business environment, stakeholders can be categorised as internal stakeholders and external stakeholders. 

Internal stakeholders:- They are those individual or group or entities that participate in company’s management activities and are focuses on providing services to the company. Such stakeholders are affected massively by the performance and profitability as well as decisions and other activities that are associated with the company. Internal stakeholders include company staffs or employees, owners of company such as partners, shareholders, board of directors who governs the incorporated entity, managers, investors who invest their money in the company (Olmedo-Cifuentes, Martínez-León & Davies, 2014).

External Stakeholders:- They do not participate as well as not involved in the company’s daily business activities, thought actions of the company influence them and have an impact on them. Such stakeholders externally deals with the company and they do not have any idea regarding company’s internal matters. External stakeholders include the following:-

  • Raw material and equipment suppliers;
  • Customers who consume the product or receive the service;
  • Creditors who are funding the company;
  • Clients to whom the company deals as well as provides its services;
  • Mediator means the marketing channels that links the company and customers such as the retailer , wholesaler, distributors and so on;
  • Competitors, society, government (Mishra, Boynton &  Mishra, 2014).

Suggesting a new Information System to support the HAS in part 2

The figure below depicts the identified issues and the concerns of the stakeholders.

Issues:- Customer Service

Concerns:- Supply Chain Management (SCM), Customer Relationship Management (CRM), Operation

Figure -2 (Rich picture for identified issues and concerns of stakeholders)

The conceptual model of the existing HAS in the marketing of Amazon Australia are as follows:-

Figure -3 (Existing process of Amazon Australia)

Figure -4 (unsuccessful areas of existing HAS of Amazon Australia)

Information Quality and User Satisfaction are the areas where in which the existing human activity system is not successful. Information quality is measured in terms of completeness, accuracy, relevance, timeliness and consistency (Mai, 2013). While user satisfaction is measured in terms of repetition of purchases, repetition of visits, user surveys (Huang et al., 2014).

The success measures of existing HAS are as follows.

  • Effectiveness implies that the system contributes the right thing to achieve the higher-level goals (Cameron & Whetten, 2013). Thus, the existing HAS of Amazon Australia must contribute accurately to enhance its customer service to higher-levels.
  • Efficacy implies thatthe system provides the required outcome (Maddux, 2016). The company must provide desired customer service to its potential as well as new customer.
  • Efficiency implies the minimum resource utilization by the system (Färe, Grosskopf & Lovell, 2013). While maintaining customer service the company must try to minimize its resource usage and the service must reach to the maximum customers.

To solve and overcome the existing HAS’s issues and concerns, the following information system can be suggested. The new information system called management information system (MIS) must be implemented and integrated to the existing information system in such a way that it must act as company’s backbone and should involve the following.

  • The system must generate in time the required information with proper quality.
  • The information must be relevant enough so that the manager can easily judge that (Laudon & Laudon, 2015).

As per porter’s value model the following activities will be affected by the proposed new information system.

  • Primary activities – operational activity, inbound logistics and outbound logistics activities, marketing and sales activities and service activity.
  • Support activities – procurement activity, technology development activity.

Internal and External stakeholders of the new information system:-

  • Company employees;
  • Company owners;
  • Raw material/ equipment suppliers;
  • Customers who consume the product or receive the service;
  • Clients to whom the company provides its services as well as deals;
  • Wholesaler, distributors, retailer;

The MIS collects, stores and analyzes data and information from multiple online systems, which thereby helps the managers and top management in decision-making. MIS aims in improving decision-making by generating up to date data of various company asset such as marketing, financial, manufacturing and inventory. MIS helps in improving operational strategy by correlating multiple data points. MIS helps in decision-making though information generation and problem identification. Moreover, MIS enables the organization in its operational and management control as well as in strategic planning (Al-Mamary, Shamsuddin, & Abdul Hamid, 2013).

Figure -5 (Process model of new information system)

The new information system within Amazon Australia can be classified as either front-end, back-end, customer-facing, or supplier-facing due to the following reasons.

Front-end information systems

  • There is existence of number of front-end information systems around the core back-end information systems.
  • Such system confronts the major stakeholders of business such as suppliers, employees, managers and customers (Günzel & Holm, 2013).

Back-end information systems

  • The system comprises of the payroll system, which accesses stored information on each employee such as rate of payment, details of tax, pay advices (Hasan et al., 2013).
  • The system also includes purchase order processing information system.

Customer-facing information systems

  • Activities of demand chain are supported by the system.
  • The system provides interface between the customer and back-end information systems such as inventory management and sales order processing (Trainor et al., 2014). 

Supplier-facing information systems

  • Activities of supply chain are supported by the system.
  • Inbound logistics and procurement activities are included in the system.
  • The system provides interface with back-end information systems such as finance, inventory management, purchase order processing, (Tan, Wong & Chung, 2016).

The significance of MIS in the organization is similar to the significance of heart to the human body. From organization point of view, it can be said that information is the blood and MIS is the heart that is required for its smooth functioning. As human body’s blood supply requirements are fulfilled by heart both in normal as well as in crisis course, similarly, MIS also does the same for the organization by providing information both during normal course and in crisis period. It does so by ensuring that the collected and processed data is send to required destinations (Venkatesh, Brown & Bala, 2013).

The success measures of the proposed new information system are as follows.

  • Effectiveness:- The proposed information system contribute accurately to enhance its customer service to higher-levels.
  • Efficacy:- The new system allows company toprovide desired customer service to its potential as well as new customer.
  • Efficiency:-The new system optimizes its resource usage while maintaining customer service.
  • The first part of the report gives an idea of Amazon Australia including its organizational structure, organization type, the business activities as well as the business strategy.
  • The second part of the report gives an idea of the existing HAS of Amazon Australia that could be problematic to the organization.
  • The third part of the report gives an idea that how the proposed information system can be used to overcome the problematic areas of HAS in Amazon Australia.
  • Amazon Australia offers its customers the option of product sorting based on review and rating.
  • The company has been considerably affected by phishing issues that enquires about customer accounting information and this needs to be addressed through interventions of anti-phishing.
  • The company needs to integrate the website activities and operations into a social networking site for enhancing sales promotion, advertising and post sales service.
  • Across its business operation, the company must create CRM interventions.
  • The company must customize and enhance its marketing campaigns.

Conclusion

From the above discussion it draws conclusion that through identification of the problematic and concerned areas of HAS and implementation of improved HAS, Amazon Australia can flourish its business more efficiently. The report verifies the present infrastructure and process behind the MIS of Amazon Australia. It is evident from the report that plenty of scope for Amazon Australia lies for enhancement of CRM and SCM. Finally, the report come up with recommendations as to how identified HAS of Amazon Australia can better make use of the proposed new information system in order to perform better. Hence, it is could be suggested to CEO of Amazon Australia that the company must ensure that it must have all required systems in place such that the collection as well as generation of data for decision-making as well as better customer service could be done. The information system must allow people to analyze and present it in a meaningful form to the management and then to the stakeholders and market.

Recommendations and reflection regarding improvement of customer service

References

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