INF30018 Information Systems Management: Usage of IT by Amazon

Introduction

This report discusses the role of Information Technology in operating any business. The chosen organisation for the research is Amazon which was founded in 1994 and is e-commerce website that sells all possible goods on its website. The report discusses the issues faced by Amazon in Information technology field which includes online shopping site that crashes during festival seasons, fake reviews by customers, wrong delivery of items and data breaches. The report also enlists the challenges Amazon is facing in Information technology field which includes building websites which can manage massive online traffic during peak seasons, protection of confidential data from online hacks, protection of company database from the online breach. The report enlists how Amazon has used Information technology for competitive gain in the market which includes various Amazon products like Amazon prime, AWS, and Amazon.com which has used the online platform to carry out its business.

The report finally enlists the marketing strategies and leadership style which has made Amazon a huge brand which include leadership of its CEO Jeff Bezos, innovation in business, diversification in products and customer satisfaction services are some of the priorities which include in his leadership style.  

Discussion

Issues faced by Amazon in Information Technology field

Amazon faces problems managing their online platform. Some of them listed are:

•    During festival seasons like Christmas or events like summer sale, big billion days. Amazon advertises about huge discounts on every item widely all over the world which lures customer to buy the goods from the website. Therefore, there is a huge rush to buy the products resulting in high traffic on website resulting in s
  
  hutdown (Khann and Sampat 2015). Many customers were not able to see any deals or open up the site.
•    Many times when a customer buys the product different online item is delivered to them which can be the fault of the software. Now the client has to talk to the client and get his product changed which takes a lot of time. Many customers claim refund, as the item which is delivered is of poor quality.
•    Amazon has an online platform where the customer can share their experience about using Amazon services. Some people misuse the platform and post bad reviews about the services of Amazon. Fake reviews can cause serious trouble to the company. Sometimes an individual bearing an evil intention will leave a bad review which will be full of lies aimed solely to harm its business (Mukherjee et al. 2013). Example: User writes that stone is delivered to him when he ordered the product online.
•    Cyber security is the biggest challenge for any company who are maintaining data online or in a cloud. According to the cyber report, there has been a loss of over 124 billion dollars due to cyber attack in the year 2017.Thus it is evident from the data that if company’s software firewall is not active its confidential data can be leaked and there will be a huge loss of money. Hackers are always trying to breach systems and cause all kinds of damage to companies worldwide (Munjal 2016). Amazon also suffered security breach where around 600 MB data were leaking login credentials of 80,000 customers.
•    Amazon web services(AWS) which are a cloud computing network storage bucket used for storing company’s data and confidential information. Due to a flaw in security, a simple misconfiguration in the software has resulted compromising of hundreds of millions of private data records. At 21 June 2017, there was a data breach which contained information on American voters. Multiple security reports revealed the dangers of cloud computing misconfigurations had compromised 200 million voters who were left exposed on Amazon Web Services. Security firm Up Guard Inc. indicated that the 200 million registered voters presented which included the date of birth, name, phone numbers, home address, and their vote registration details. Thus the data proves that Amazon needs to have better software for storage of sensitive information (Varia and Mathew 2014).Analyzing various issues challenges are enlisted for Amazon which they need to overcome:
•    (Agrawal and Sareen  2016) To develop a better website which can manage the traffic of customer request during peak seasons like festival and event? With various e-commerce site operating in the world such as Alibaba, Flipkart, shop clues Amazon needs to upgrade to a better website which can manage the online traffic during festival seasons as at this time most of the customer buys online due to attractive discount as the result company revenue is more in this season. In 2016 peak season there was an exponential and e-commerce growth earning over 91 billion dollars in online sales which was 11 percent increase than the previous year. The three days of online shopping were Thanksgiving, Black Friday and Cyber Monday in a total of 57 days of the holiday season there was approx $1 billion in sales. Therefore it is quite evident that online sales are growing and there has been an exponential growth in online sales during holidays.
•    Amazon has a huge challenge to protect its confidential data from getting leaked as cyber crime is increasing and there has reportedly around 400 billion dollar loss due to computer crime(Perlroth and Harris 2014). Amazon being a most valued global brand, hackers are continuously trying to hack Amazon data. Thus it is a huge challenge for Amazon to protect its data from the hackers.
•    Amazon web services (AWS) which were launched in 2006 cloud computing platform where a company can store its database. It is facing tough competition in a market which promises to be a different and more advanced platform than the cloud computing platform. Companies are using AWS services to transfer companies document, especially those built on a database management systems such as Microsoft SQL Server, Oracle or IBM DB2.Thus there is a huge demand for cloud computing services in the world as companies are transferring almost half of their work load into cloud computing platforms (Radford 2014).If any company using the service of AWS to store its data then it is the huge challenge for Amazon to protect their data, at 19 July 2017 there was another cloud data leakage of Dow Jones & Company after the data breach of Verizon. Dow Jones confirmed that AWS data leak included customer names, email addresses and credit card numbers were part of the cloud data leakage. The data breach affected 2.2 million customer details. Therefore it is the huge challenge for Amazon to protect its data from breaching.

Usage of IT by Amazon to gain competitive advantage

Around forty percent of the total world population is using the internet thus it is the great platform for any business man to expand its business to attract maximum customers. Various reasons are enlisted that how Amazon has used Information Technology to reach maximum people:

•    (Laudon and Traver 2013) Amazon has the different product which uses the online platform like Amazon prime, Amazon web services, Amazon online shopping. It also invested in Alexa internet, Book deposit, Audible.com, ComiXology, Goodreads Shelfari which uses the online platform to conduct its business.
• With over 4 billion of people using the internet at a time Amazon online shopping sells a full range of products from low price to high price and every product contains reviews of customers. Instead of driving to the mall or shops customer can shop anytime from anywhere, and the product is delivered within 2-3 days of order (Jusoh and Ling 2012). According to the particular study, which examined that over four million online purchases, Amazon accounted for the majority (53%) of the growth in US e-commerce sales for the year earning over 70 million revenue in 2017 (Resca and Spagnoletti 2014).
•    Another product of Amazon is Amazon prime Launched in 2007, and Amazon Prime is a paid membership programme which offers the subscribed users unlimited access to music, movies and e-books (Gelal, Soyak and Yildirim 2013).The Paid original members can access unlimited streaming of over 15,000 movies and TV episodes and can access to 800,000 online Kindle e-books. Amazon also launched Prime Music an online music service which will face competition with Apple.
• The third major online product of Amazon is Amazon web services (AWS) a cloud computing platform which are used for storage of company’s database (Varia and Mathew 2014). More than 1 million companies are using AWS to store their database. AWS sales are the Amazon’s fast-growing business to provide companies' data and handle their documents in the cloud; the market has risen to 42.7 percent earning revenue up to 3.66 billion dollars in the year 2017 (Varia and Mathew 2014).
• Amazon has invested in various startups which are using the online platform to carry out their business. Investing in startups has given Amazon opportunity to enter into different sector of the market thus diversifying their business

Strategies adopted by Amazon to develop business culture

• Amazon has been voted as most innovative company in 2017 and its CEO Jeff Bezos

Has been voted as “The Greatest Living Business Leader” in 2017 thus one of the main reason why Amazon is so successful today is that of its innovation. Unlike other companies like Apple, Google, and Microsoft, Amazon does not function on a tightly designed business plan. It instead emphasizes on the platform where each serves its customers in the best and fastest possible way. According to the CEO of Amazon the challenging part of the marketing is to maintain loyal client base is by providing the better offer and maximum discount than its rival companies (Rivet 2017). The challenge to attract the huge customer has motivated them to devise innovative ideas for the enterprise (Thorpe and Gorman, 2016). Amazon Prime which was founded in 2005 is now available in more than 200 countries. Amazon has invested in potential startups like Alexa, jungle, digital photography. Amazon has also started its delivery through drones delivering its first order through a drone which only took thirteen minutes to deliver the package. The drone delivery will be beneficial in rural areas.

• (Goldfayn 2012) Amazon is very serious when it comes to customer satisfaction. It maintains an excellent customer service like giving good offers for loyal customers, same day return service if the customer doesn't like the product, replacement in two days if the product is defective this kind of services enable Amazon for better customer satisfaction(Klaus, 2013). Customers have voted Amazon rank one in customer satisfaction, through American Customer Satisfaction Index (ACSI) achieving a score of 86. ACSI surveyed over 10,000 customers to on the customer satisfaction, delivery services, quality and value across retailers products nationwide, and keeping mind all indexes Amazon has been given a top rank for the ninth consecutive year.
• Starting its business as an online bookstore in 1994, today Amazon offers as small as the pin to as large as electronic gadgets. (Raphan and Friedman 2014) The company sells diversified products like an edible item, music, books, clothing, electronics, cosmetics, health items, automotive tools. Much of the Amazon’s success is pivoted on the fact that they are not afraid of taking a risk to sell anything and everything on its E-commerce site.
•  Jeff Bezos has been voted as most successful leader of 2017 (Landau  2012). It is due to his leadership quality that Amazon is successful today. Focusing on customers, not the competitor, taking business for m market leadership, focusing on diversification, treating employees like owners, Taking risks for market leadership, Make employees think like owners, Build a culture which is right for the company are some of the leadership principles on which he runs his business.
• Amazon has supported various startup in their expansion by actively investing in the Amazon has invested in other smaller companies for the following reasons:

1.    Financial Benefit: Amazon has invested in some of the potential startups which have huge growth opportunity in future if the startup makes a profit from the business. Amazon will also get financial benefit
2.    Future Acquisition: if a startup fails to make any profit from its business than Amazon can acquire the start-up and implements its idea to run the business
3.    To penetrate new markets: Investing in different startups will enable Amazon to enter into all sectors of the market.

•    Amazon follows management follows the two pizza rule which means that management is limited to just five to seven people which allow teams to test their ideas without too many objections, which guards against groupthink. The small groups have led to significant innovations, like the Gold Box deals, a popular promotion that gave customers limited-time deals.
•    Amazon provides best services for any of its product; quick delivery has often been a barrier in e-commerce services. Amazon promises to deliver products within as little as 1 hour and mostly, two days. Amazon has started a patent for drone-based delivery which the centre of media attention, Amazon is also building its transportation services, and an X-Ray service lets customers “see” what’s in their closed box through the app.

Conclusion

 From the report, it can be concluded that Amazon has diverted from traditional business strategy and work towards customer satisfaction. Diversification and Innovation are the two important principles on which Amazon functions. Though it the fourth most valued company with its worth up to one trillion it is still facing the challenge in the field of cyber security. Over one million companies are using Amazon services to store their business database, and it is a huge problem for Amazon to protect company’s data from a data breach. Amazon also needs to build a better website of online shopping portal to control data traffic during peak seasons. Under vision and leadership of Jeff Bozos, the company has grown from a book store to largest online shopping business making twelfth position in fortune 500 companies.

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