This report aims to critically evaluate the electronic business system of Amazon.com, Inc. This objective will be achieved in this report by clearly explaining E business, Principle-Based Systems Analysis (PBSA) methodology or any other related terminologies. Further these systems will be compared and critically evaluated to the operational method of the e-business activity carried out by Amazon.
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“E-Business is the conduction of business in the electronic marketplace. In practice, this involves the introduction of new revenue streams through the use of e-commerce, the enhancement of relationships between clients and partners and improving efficiency from using knowledge management systems. E-business can be conducted over the public Internet, through internal intranets and over secure private extranets.” (K-Solutions 2000)
However the most basic definition or explanation of e-business is “using the internet to connect with customers, partners, and suppliers. But the term also implies the transformation of existing business processes to make them more efficient.” (Netessence 2003)
E Business in a lay mans terms is conducting of business over the internet. Today it is more generic than the term e commerce because it not just buying and selling but also about customer servicing and business collaborations.
Amazon.com. Inc is an American E Commerce company founded by Jeff Bezos in 1994. It started as an online book seller and has today diversified into various diversifications. Amazon started its rush of acquiring various companies and adopting diversifications in its offerings in the late 90s.
“That same land-rush logic fuelled Amazon’s decision to start selling toys, electronics, tools, patio furniture and even cellphone service plans – all in 1999 and 2000.” (Rivlin 2005)
There have been mixed reviews and responses about the company and its business model and operational systems. However Mr. Bezos scoffed at sceptics, “Amazon has gold-plated customer service, he said, and has championed any number of nifty early innovations, like one-click buying. With such superior service, he seems to suggest, why won’t the world beat a path to his door to buy everything from toasters to trumpets and tennis rackets?” (NY Times 2005)
“A system is a set of interrelated components working together to achieve a collective goal.” (Bocji 2003)
(Alter 2002a) defines a system as “business processes using computer and communication technologies and computerised data”
An E-Business System (EBS) is a system which performs and co-ordinates business processes using computer and communication technologies and computerised data.
The E Business System of Amazon is a sales oriented one. The architecture it operates on is purely web based right from selection to purchase and payment for the goods or services. Amazon sells its products on the internet making it a virtual access store. However Amazon has established separate websites in Canada, the United Kingdom, Germany, France, China, and Japan. It ships globally on selected products.
The unspoken mission and vision of Amazon is to be the market leader and world largest online shopping portal. Amazon indeed “made its Internet premiere when Mr. Bezos opened a Web site he audaciously called ‘Earth’s Biggest Bookstore’. Amazon sold only a half-million dollars’ worth of books in the first six months, but was soon posting the kind of gaudy growth rates that impress Wall Street: sales hit $15.7 million in 1996 and $147.8 million in 1997.” (Rivlin 2005)
E Business and technology system has been the backbone of the company’s operations since its inception. Amazon right from the starting has had all details about its products fed in the computer as it did for books in its early years. “Books, it turns out, are among the most highly data-based items on the planet. The wholesalers even had CD-ROMs listing them. It seemed to Bezos as if all the stuff “had been meticulously organized so it could be put online.” (TIME 1999)
“The principle-based analysis (PBSA) method starts with defining the problem and the work system within which the problem exists. It then uses the seven work system principles to explore the situation and to find potential improvements. The last step is making a recommendation about what to do and why.” (Alter 2002a)
E-business system is just a platform used to perform business. E business is all about people and procedures as vital components. In any given business the base or back bone of the business is trading. Technology is all about being a platform to perform business. Technology provides the platform on which the system is built (another essential component). Business processes form a major chunk of the process and must be reviewed for the e-business model. E-business is built on a work system.
In the case of Amazon, the e-business system is the only source of trading. But it is still defined as a platform used to perform business. Amazon’s business process involves people and procedures as vital ingredients of the business mix. In any given business line of Amazon, the base or back bone of the business is trading but the major platform used is technology.
However in the case of Amazon’s performance it is not purely based on trading or technology but is also built on the work system. The work system involves inventory, warehousing, pricing, accounts, billing, collections and various other department which form the backbone of the company. Hence it is rightly said that E-Business has been built on technology but is not about technology.
A Work System is a system of people, procedures, hardware, software, communication links and data, working together to achieve the business objectives of the organisation.
Modern organisations manage complex relationships and vast quantities of data and information using Work Systems.
Customers are the main consumers and target audience of a company. They are the people who use and receive direct benefits from the products and services produced by the work system and this in turn generates the revenue for the company. They may be external customers who receive the organization’s products and/or services or they may be internal customers inside the organization.
In the case of Amazon, all registered users (active and pro-active) are customers of the company.
Products and Services are the combination of physical things, information, and services that the work system produces for its customers. The work system exists to produce these products and services.
Amazon today offers a wide range of products from books to toys, electronics to furniture all at the convenience of a single click.
Business process is a sequence of activities that are performed within the work system. These steps may be defined or explained precisely in some scenarios or may be relatively unstructured in others. The process is purely objective and can be tamed or tailored according to the requirements of a business work system.
Amazon business system is purely internet based, right form selection to purchase and payment.
Participants are people who perform the work steps in the business process. Some participants may use computers and information technology extensively, whereas others may use little or no technology.
Participants here means the back end office of Amazon including the administration, shipping and various other team responsible to keep the work system of Amazon going.
Information is the data available to be used by participants to carry their routine work. Some of the information may be computerized, but other important information may never be captured on a computer.
Amazon system of making data available is mostly in soft copies. However some areas of the work system still work on a hard copy system.
Technology includes all hardware, software, and other equipments used by the participants while at work. The technology considered to be within a work system is dedicated to that system, whereas technical infrastructure is technology shared with other systems.
Amazon uses higher end enterprise servers and dedicated online servers for its portal. All its business offerings are made available for its customer on the internet.
Context is the organizational, competitive, technical, and regulatory realm within which the work system operates. These environmental factors affect the system’s performance even though the system does not rely on them directly in order to operate.
Amazons context can refer to the organizational structure, hierarchy, technical defaults, its competitions in the market like eBay, and other legislative regulations which directly or indirectly influence the work system.
Infrastructure is shared human and technical resources that the work system relies on even though these resources exist and are managed outside of it. This typically includes human infrastructure such as support and training staff, information infrastructure such as shared databases, and technical infrastructure such as networks and programming technology.
Amazon has a strong dedicated team of support staff which works through out the year to ensure customer satisfaction, optimum utilization of resources and to ensure timely delivery of all the products.