Introduction
Since the era of the industrial revolution, technology has been playing an important role in the continuous improvement of organizational performance. In the last three decades, information-based technology has become a major point of focus for small, medium, and multinational organizations that seek to improve their competitiveness in the market (O’Brien, 2009). Organizations of all sizes and nature are increasingly facing the pressure to turn to technology-based management using IT tools and applications as a way of increasing their competitiveness (Beynon-Davies, 2009). Informational technology era has produced rigorous business pressures that affect the state of current and future competitiveness in organizations. These business pressures have brought some rapid changes in most industries. While most of the modern organizations have attempted to obtain, implement and use some of the most sophisticated IT tools, the states of these applications differ significantly from one organization to another (McLeod & Schell, 2007). Consequently, these differences cause significant disparities in their abilities to provide competitive advantage to an organization. In this discussion, I will describe the state of Information Technology in my organization (Amazon.com Inc) to reveal its strengths and weaknesses and highlight areas that need improvement in order to ensure that the organization uses the system to achieve a competitive advantage. In particular, my presentation will review the topic with an in-depth analysis of the organization’s information system (IS), information system development, the state of electronic commerce (e-commerce), storing and accessing of information and knowledge and the process of enhancing IT to gain a competitive advantage.
Located in Seattle, Amazon Inc (Amazon.com Inc) is an international corporation that deals with retail business using electronic commerce. It deals with a large number of products such as books, videos, software, electronics and well as household products, clothes, jewelry, and foodstuffs. Founded in 1994, it is the largest online retailer in the world, having started its business when Information technology was a young project. As such, it has been able to manage its information technology successfully, gaining a competitive advantage over its global competitors.
The current state of Information Technology and management in Amazon.com Inc: How the company builds competitive advantage
To gain a comprehensive understanding of the state of information technology in Amazon.com Inc, I decided to investigate the situation from an interview with two key persons in the organization. The aim was to get the desired information from reliable sources. I also wanted to make both primary and secondary sources available in print and electronic form. I was lucky to have an opportunity to interview Mr. Jeff Bezos, the founder, president, and Chief Executive Officer of the company. I was also lucky to meet Andrew R. Jassy, the Senior Vice President of Web Services. From the interviews, I realized a number of facts about IT management and its application to achieve a competitive advantage.
First, Mr. Bezos stated that the current state of technology at the company is largely information-based, given that the company is purely an e-commerce project. The president started with a brief narration of the company’s journey from a simple internet-based project to the current multibillion-dollar organization. In this case, the founder stated that the company is one of the few corporations that have used some unique features of IT to achieve their dreams. For instance, IT has deconstructed and reconfigured the traditional system of value chains by disrupting the old boundaries and the emergence of new business models. The founder wanted to show how the company used dedicated strategies to gain competitive advantage through market leadership within the new business models set by the internet technology.
Value chains and major players within the electronic commerce
Bezos informs me that some of the major aspects of the information technology that allowed the company to achieve a competitive advantage over the traditional corporations in the retail market include the deconstruction and reconfiguration of the traditional value and supply chain systems.
Under the influence of a rapid and dynamic rate of technological progress and development, electronic commerce (or electronic business) has evolved to include all those technologies that are “internetworked” together. Bezos informs me that the term e-commerce involves the processes of preparing, supporting, processing and maintaining the performance exchange through networked electronics. The president says that his company uses e-commerce to focus on transaction and distribution processes and all the methods used to support these processes. This definition is similar to the one developed by Wirtz in 1990s (Blanchard & Fabrycky, 2006). In addition, the president informed me that electronic-commerce is used to mediate the process of buying and selling information, services as well as products through a system of internetworked computers and their applications. In addition, it enhances the exchange of these goods and services (Saunders, 2009). Within the company, e-commerce has electronically mapped the process of communicating information between the suppliers, marketers and buyers. This process, which is commonly known as mediation in management information systems, allows Amazon.com Inc to coordinate its business interactions between the three types of players in a globalized market.
From an analysis of the president’s response in the interview, I realized that the players in the globalized and electronic business environment are grouped into three phases of transaction- information, negotiation and execution. The three phases form the entire process of business transaction. The location of contact between supply and demand in the traditional trade system has been virtualized through electronic commerce (O’Brien, 2009). First, market access is ubiquitous, which removes the restrictions created by geographical space and time. Secondly, the electronic market is highly augmented with transparency that results in a reduction in the cost of doing business. Finally, the process is enhanced with an increased speed of communication between all the players involved. Unlike the traditional supply chain systems, the virtualized supply chain system developed by e-commerce allows the market players to take the role of either the trader or the customer during the business process. Looking at the Amzon.com Inc business model, the supply chain system has three important players recognizable in demand and supply sides- the consumers, businesses, and administrative agencies (O’Brien, 2009). Noteworthy, all these players are internetworked in a manner that allows them to carry out business within the context of the traditional way, which includes such features as auction, haggling and discussions on terms of payment. It is also worth noting that Amzon.com takes the role of the administrator, retailers take the role of businesses while consumers are the global communities that visit the Amazon.com websites to purchase products and services.
Digitalized storage and assessment of information and knowledge: The main strength of Amazon.com Inc
On his part, Andrew R. Jassy stated that Amazon.com Inc has some major areas of strength that create a competitive advantage over its competitors in the retail market. These strengths are entirely achieved through the management of information systems, where data and knowledge are stored, accessed and used in trading. I learned that the company achieves a competitive advantage by managing its information system such as knowledge, data, transaction as well as the process of logistics in a manner that allows all the players to interact in a virtual community, which is devoid of temporal and spatial restrictions. Jassy believes that the creation of value and increase in profitability can be achieved by investing in information systems development and management. The aim is to develop a radical and dynamic business environment (Mcdermott, Snyder & Wenger, 2002).
Moreover, I learned that Amazon.com Inc uses a mainframe-based on Service-Oriented Architecture (SOA). This architecture allows the company’s management system to gain a level of scalability, performance, availability of growth and enhancement of a wide range of fast and effective software. In this way, the system development process has allowed the company to perform end-to-end data in order to store information about a large number of items, consumers, and orders. In this way, the online sites are reinforced with a large volume of information, data and knowledge. Moreover, this makes the sites more attractive because it allows one to reuse the information in terms of partial work. It also allows one to use more than one context instead of a large process. Jassy also informed me that they prefer SOA at the company because it is highly comprehensive, decentralized as well as fully distributed, enabling it to serve a large number of applications at the same time (O’Brien, 2009). This means that the company can widely vary its business model at any time of its operation.
Secondly, the company’s strength is achieved within the context of the company’s transaction processing system. The system supports all business transactions. The transaction processing system creates convenience for all users, whether they are traders or customers. The globalized client community creates an opportunity to obtain free personal accounts that allow them to visit the company website by simply providing their login details. These accounts have unique and personalized features such as a “wish list”, a “shopping cart” and “shopping baskets”. In addition, there is a unique feature known as “One Click”, which allows customers to skip some steps involved in the checkout process because they can submit their billing addresses or credit/debit cards.
Moreover, the interview with Jassy provided information about the company’s development of an online payment system as opposed to the dependency on the existing ones such as PayPal.com and Skill.com. I realized that the online payment system, known as “The Honor System”, was designed and developed to provide customers with an easy and instant method of payment in their Amazon accounts, but in a controlled process. I realized that the method is attractive to the customers because they are asked to provide their details such as billing addresses and credit card information for confirmation but payment can be made later. In addition, the amounts to be paid by a customer are automatically debited from the card after the customers have received their goods or services.
Thirdly, Amazon.com has developed the “recommender system” that provides its customers with the right and relevant information critical to their needs. This system is based on past information about the transactions made previously by a returning customer (Sinclair, 2008). It takes into account the customer’s past behavior, the behavior of other customers with similar needs, the items browsed and purchases, the similarity of each client and other such combinations. When a returning customer is browsing the company’s website to search for information about products and services, these factors as well as their combinations are used to make recommendations to the customer in order to make purchasing easy and attractive (Saunders, 2009). For instance, books, magazines, or journals by the same author, similar authors, similar subjects, or similar backgrounds or genera are displayed and recommended by the recommender system. In this way, it makes access to information fast and effective.
Weaknesses and challenges
Information system development and application, including electronic commerce, storing and accessing information using IS and the achievement of competitive advantage are all affected by several issues in the modern context. In fact, Amazon.com deals with a number of problems associated with the development and use of information systems in the modern world. For instance, laws and regulations in various countries are sometimes prohibitive to online business. While the company enjoys the dynamism of the law in the western world, penetrating some foreign markets in other countries has sometimes proved to be a difficult task. For example, countries have differing laws controlling e-business, communication standards, security systems, and practices. A good example is the case of Amazon.com in China. In China, the company uses an official website known as Joyo.com to fit into the Chinese e-business system because the regulations in China are different from the systems in America and the western world (Spector, 2010). The company needed to adopt a different business approach when entering the Chinese market. In addition, culture and language differences affect Amazon’s business in some countries because the website must be configured to fit into the local culture. Moreover, it is worth noting that Amazon.com, like any other online-based organization, is faced with technical and security challenges. For instance, security threats such as hacking, eavesdropping, siphoning, and tapping of information are real threats posed by improving technologies. In addition, a malicious program used by attackers and hackers poses a major threat to the company, which is likely to cause major losses in case they happen.
Recommendations
To cope with legal, cultural and language differences, the company should consider configuring its website in order to “Think globally but act locally”. This means that even though the information accessible to remote users is globally available, local aspects such as language and culture should be seen on the user-end. Secondly, the system development cycle used by the company should move fast to cope with the dynamic technologies used by online hackers and other malicious web users.
Conclusion
At amazon.com Inc, the state of information system reveals that the company has gained a competitive advantage as the largest online retailer by simply using the e-commerce model of business. Although the company is faced with several problems, the business is modern, globalized, and acceptable in various parts of the world, which is making the company‘s performance and growth increase every year.
References
Beynon-Davies, P. (2009). Business Information Systems. Palgrave, Basingstoke.
Blanchard, B. S., & Fabrycky, W. J. (2006). Systems engineering and analysis. New Jersey: Prentice Hall.
Mcdermott, R., Snyder, W. M., & Wenger, E. (2002). Cultivating communities of practice: A guide to managing knowledge. Cambridge, MA: Harvard business school press.
McLeod, R., & Schell, G. P. (2007). Management information systems. New York, NY: Pearson Education.
O’Brien, J. A. (2009). Management information systems- managing information technology oin the internetworked enterprise. New York, NY: Irwin McGraw-Hill.
Saunders, R. (2009). Business the Amazon.com way: Secrets of the world’s most astonishing web business. New York, NY: John Willey and Sons.
Sinclair, J. T. (2008). E-Bay, The smart Way. New York: Amacom.
Spector, R. (2010). Amazon.com Business: Get big fast. Cambridge, MA: Harper Business.