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ContentsI. Executive Summary.....................................................................................2

II. Synopsis.......................................................................................................2

III. Potential Alternatives.....................................................................................3

IV. Corporate Strategy SWOT..............................................................................

V. Critical Success !actors................................................................................"

VI. IS#IT Assessment............................................................................................$

VII. IS !unction...................................................................................................%3

VIII. IS Vision.......................................................................................................%3

I&. 'is( Analysis................................................................................................%)

&. Porter*s !ive !orces....................................................................................%"

&I. Conclusion...................................................................................................%$

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I. Executive Summary

Ama+on.com is an online retailer t,at -egan operating as a -oo(store 2 years

ago/ -ut ,as since expan0e0 to -ecome a one stop s,op 1or nearly any pro0uct an0

some services. Ama+on ,as expan0e0 its pro0uct selection in or0er to 1ulll itsmission to -e Eart,*s most customer4centric company5 6!orm %4758. W,ile t,ere

are a num-er o1 competitors to Ama+on/ suc, as Ali-a-a/ e9ay/ an0 Walmart/ no

competitor exists t,at o:ers as compre,ensive o1 a pro0uct an0 service selection as

Ama+on.

In regar0s to its in1ormation tec,nology/ Ama+on ,as 0evelope0 systems to

streamline its operations/ collect in1ormation on its customers/ an0 recommen0

pro0ucts/ as ;ell as in1ormation systems t,at Ama+on uses an0 sells to ot,ers in

or0er to ma(e a prot. Ama+on*s in1ormation systems are gro;ing in complexity as

t,e company expan0s its si+e an0 operations/ ,o;ever/ t,e company ,as an

opportunity to strengt,en its systems in a couple o1 areas to 0ecrease its

vulnera-ility to intrusions/ suc, as ,ac(ers/ or system 1ailures.

Ot,er opportunities exist 1or Ama+on 1rom a -usiness stan0point/ as ;ell. Some

o1 t,ese opportunities inclu0e tiere0 Prime mem-ers,ips ;it, t,e intent o1 creating

more loyalty 1rom 1re<uent s,oppers -y o:ering a mem-ers,ip pac(age t,at is

tailore0 to t,eir specic nee0s/ 1or;ar0 integration strategies suc, as purc,asing

0istri-utors in or0er to streamline its operations 1urt,er/ an0 ,ori+ontal integration

suc, as ac<uiring competitors ;it, t,e intent o1 expan0 its customer -ase an0

glo-al mar(et reac,.

As t,e 1ollo;ing report ;ill s,o;/ Ama+on*s in1ormation tec,nology an0 relate0

systems are an integral part o1 t,e company*s operations. W,ile a couple o1 

vulnera-ilities nee0 to -e a00resse0 ;it,in its current in1rastructure/ in or0er to -e

success1ul going 1or;ar0/ Ama+on nee0s to ensure t,at it 0e0icates t,e resources

necessary to (eep up ;it, t,e 0eman0 1or its pro0ucts an0 services an0/ ;,en

-uil0ing upon t,e systems currently in place/ t,e company re0uces t,e complexity

o1 t,e in1ormation structures in or0er to (eep its systems un0erstan0a-le an0 open

1or gro;t,.

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II. Synopsis

Ama+on.com ;as starte0 in %==) as an online -oo(store. T,e company*s

mission is to -e Eart,*s most customer4centric company5 an0 1our principles ,elp

gui0e t,e company to ac,ieve t,is mission> customer obsession rather than

competitor focus, passion for invention, commitment to operational

excellence, and long-term thinking5 6!orm %4758. T,ese gui0ing principles

,ave le0 t,e company to improve its ;e-site an0 en,ance its pro0uct o:erings/

;,et,er 1rom suppliers or creating t,eir o;n/ as ;ell as integrating ;it, ot,er

companies in or0er to -ecome more e?cient in its 0ay to 0ay operations. T,roug,

t,e use o1 its improve0 ;e-site an0 its customer relations,ip management/ Ama+on

,as 0evelope0 a (een un0erstan0ing o1 consumer 0eman0s ;,ic, ,as le0 t,e

company to provi0e in1ormation tec,nology services to ot,er companies 1or a 1ee.

Ama+on*s core competencies exist in its in1ormation in1rastructures an0 t,e

company ,as 0evelope0 a ;ay to use it ;it,in its o;n operations an0 ma(e it a

success1ul -usiness segment as ;ell. T,ere1ore/ as t,e 1ollo;ing in1ormation s,o;s/

Ama+on*s potential areas to improve upon exist in decreasing vulnerabilities to

its existing systems and implementing certain business strategies to carry

out the operational eciencies established by its information systems.

III. otential !lternatives

Clearly/ Ama+on ,as many success1ul initiatives/ -ase0 on its massive

earnings. T,ir0 <uarter sales are up 23@ to 2). -illion in t,e t,ir0 <uarter o1 

2%)/ an0 t,ey anticipate a recor0 ,oli0ay season in t,e coming ;ee(s

6Ama+on.com8. Even ;it, t,eir over;,elming success/ t,ere are alternatives t,at

Ama+on s,oul0 explore to increase t,eir sales an0 customer -ase> tiere0 Prime

mem-ers,ip/ 1or;ar0 integration/ an0 ,ori+ontal integration.

"iered rime #embership

Ama+on Prime is a pai0 mem-ers,ip t,at o:ers t;o40ay s,ipping on millions

o1 items/ an0 access to 0igital movies/ -oo(s/ an0 music. Wit, a cost o1 == per

year/ it results in not only a00itional revenue/ -ut also in customer loyaltyB Prime

customers spen0 almost t,ree times more t,an ;,at non4Prime customers spen0

6Weise8. Alt,oug, Ama+on ,as not release0 specic num-ers/ it is estimate0 t,at

)@ o1 t,eir customers su-scri-e to Ama+on Prime -ase0 on surveys 6Weise8. T,at

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leaves a su-stantial opportunity ;it, t,e remaining ))@. One alternative is to

intro0uce a tiere0 Prime mem-ers,ip/ ;,ere t,ere are 0i:erent pricing options

correspon0ing to guarantee0 0elivery times. !or t,ose customers una-le to usti1y

t,e == annual 1ee 1or t;o40ay s,ipping/ per,aps a = price tag 1or t,ree40ay

s,ipping ;oul0 meet t,eir nee0s. !urt,ermore/ 1or t,ose customers t,at ;ill pay a

premium 1or next 0ay s,ipping/ per,aps a 2 annual 1ee ;oul0 -e success1ul. O1 

course/ actual price 0eterminations ;oul0 ,ave to 1actor in s,ipping costs an0

specic geograp,ic regions 1or consi0eration.

$or%ard Integration

Increasing e?ciency in a company*s supply c,ain is not a ne; strategy.

Ama+on is actually ;or(ing on a 0rone4-ase0 0elivery service name0 Ama+on

Prime Air/5 ;,ic, 0elivers pac(ages t,roug, t,e air in 3 minutes 67ing8. W,ile

;e ;ait to see i1 t,is can -ecome a reality/ Ama+on s,oul0 loo( at ot,er alternatives

1or 0eliveryB specically/ t,ey s,oul0 ac<uire one or more 0elivery companies/ suc,

as DF/ GPS/ or !e0Ex. As re1erence0 in t,eir Septem-er 2%) <uarterly report/

t,ey are ,ig,ly 0epen0ent on s,ipping companies/ an0 any issues coul0 negatively

impact our operation results an0 customer experience5 6Ama+on.com8. Ac<uiring

one or more s,ipping companies ;ill allo; Ama+on to prioriti+e t,eir s,ipments an0

,ave 0irect control o1 t,e relia-ility an0 <uality o1 t,e 0elivery process.

&ori'ontal Integration

Anot,er alternative t,at Ama+on s,oul0 explore is implementing ,ori+ontal

integration/ ;,ere t,ey ;oul0 ac<uire competitors in t,e same in0ustry. In Asia/

C,ina*s Ali-a-a an0 Hapan*s 'a(uten are e4commerce lea0ers. Wit, glo-ali+ation/

Western companies 6suc, as Ama+on8 ;ill loo( to expan0 t,eir Asian mar(etB

li(e;ise/ Asian companies ;ill also loo( to expan0 t,eir e:orts in t,e West.

Alt,oug, Ama+on alrea0y ,as an international company 6name0 Ama+onlo-al8/

t,ere is still mar(et s,are to -e ,a0 overseas/ especially since t,e maority o1 

Ali-a-a*s an0 'a(uten*s ;e- site tra?c is 1rom Asia 6$"@ an0 J3@/ respectively8

6Kartin8. 9y ac<uiring an Asian retailer lea0er/ Ama+on may re0uce competition

an0 increase mar(et s,are. !urt,ermore/ Ama+on can also loo( to ac<uire

success1ul American mar(etplace companies/ suc, as e9ay/ Craigslist/ or Etsy.

I(. Corporate Strategy S)*"

Strengths

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Ama+on ,as a multitu0e o1 strengt,s>

4 Ama+on is one o1 t,e largest online retailers in t,e ;orl0. 9ecause o1 

Ama+on*s si+e an0 relations,ip ;it, its suppliers/ t,e retailer carries nearly

anyt,ing 1or ;,ic, s,oppers are loo(ing/ 1rom electronics/ to -oo(s/ clot,es/

or 1urniture.4 9ecause o1 t,eir vast pro0uct o:ering/ as ;ell as t,eir image an0 reputation

as a one stop s,op/5 Ama+on is a very ;ell4(no;n ;e-site an0 is o1ten t,e

rst one to come to t,e min0s o1 online s,oppers.4 T,e launc, o1 Ama+on We- Services in 2" ,as allo;e0 t,e company to

progress <uic(ly in t,e clou0 computing el0. Ama+on can no; provi0e

online services or client4si0e applications to ot,er companies. T,is

tec,nological a0vancement ,as also ena-le0 Ama+on to utili+e its o;n

servers 1or 0ata storage ;,ic, saves t,e company money in re0uce0 clou0

expenses.4 Ama+on is num-er one in customer service 1or nine consecutive years 0ue to

t,eir customer relations,ips management plat1orm. Personali+e0 treatment

an0 recommen0ations generate0 t,roug, t,e C'K plat1orm ,as increase0

-ran0 loyalty an0 ease o1 0aily operations 0ue to increase0 e?ciencies in

1ront an0 -ac( en0 sales operations.4 Ama+on is also a cost lea0er L ;,en Ama+on*s suppliers provi0e goo0s

t,roug, t,eir ;e-site/ Ama+on passes t,ese savings onto t,e consumer.4 Ama+on also ,as ,a0 stea0y/ strong revenue gro;t,/ as evi0ence0 -y t,eir

nancials.

6Ama+on.Com8/ 6Customers 'an(58.

)eaknesses

Ama+on/ ,o;ever/ also ,as some ;ea(nesses to a00ress>

4 T,e rst ;ea(ness o1 Ama+on is t,eir use o1 1ree s,ipping. W,ile 1ree

s,ipping o:ers may attract or retain customers/ t,e company is re0ucing its

prot potential in an in0ustry t,at is notorious 1or ,aving lo; prot margins to

-egin ;it,.4 Anot,er ;ea(ness is pro0uct 1ailures. W,ile t,ere ,as -een success ;it,

some o1 its (ey pro0ucts/ suc, as t,e !ire P,one/ ot,er pro0uct launc,es ,ave

;aste0 capital Ama+on coul0 ,ave utili+e0 in ot,er areas.4 Fastly/ Ama+on ,as 1ace0 some negative -ac(las, 1rom -a0 pu-licity over

reasons suc, as pu-lic 1eu0s ;it, -oo(s pu-lis,ers to its poor ;are,ouse

con0itions.

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6Ama+on.Com8/ 6D*On1ro8/ 67elle,er8.

*pportunities

Ama+on 0oes ,ave some opportunities to consi0er>

4 Implementing an online payment system in0epen0ent o1 PayPal t,at ;ill

allo; 1or greater control over s,oppers* personal in1ormation an0 re0uce0 ris(

o1 online security -reac,es.4 Creating more Ama+on4-ran0 pro0ucts t,at coul0 increase prot margins

since t,ey are ,ig,er on manu1acture0 goo0s. I1 Ama+on ;ere to c,oose to

implement t,is opportunity/ t,e company ;oul0 nee0 to increase researc,

an0 0evelopment expen0itures in or0er to 0ecrease pro0uct 1ailures t,at

,ave occurre0 in t,e past.4 Increase -ric( an0 mortar locations ;,ic, coul0 lea0 to a ;i0er customer

mar(et to t,ose s,oppers ;,o pre1er to ma(e purc,ases in person. T,is ;ill

allo; Ama+on to increase its customer -ase/ allo; more people to ta(e

a0vantage o1 Ama+on*s lo; prices/ an0 increase Ama+on*s un0erstan0ing o1 

;,at people are loo(ing 1or in t,e geograp,ic regions surroun0ing t,e stores.4 Increase s,ops in t,e online mar(et place suc, as ac<uiring Etsy to ta(e t,e

place o1 t,e omema0e5 s,op to -roa0en t,eir potential mar(et.

6Ama+on.Com8

"hreats

4 Ama+on 1aces a t,reat 1rom ,ac(ers -reac,ing t,eir ;e-site security/ ;,ic,

is al;ays a possi-ility consi0ering t,e a0vance0 (no;le0ge an0 a-ilities o1 

,ac(ers an0 t,e valua-le customer in1ormation store0 in Ama+on*s

in1ormation system.4 Fosing sales to smaller retailers ;,o speciali+e in a particular su-set o1 

goo0s.

6Ama+on.Com8

(. Critical Success $actors

Critical success 1actors are actions t,e company must ta(e in or0er to -e

success1ul in ac,ieving company o-ectives. A company*s critical success 1actors

are typically -ase0 o: o1 t,e company*s mission an0#or strategic goals. Ama+on*s

mission is to -e Eart,*s most customer4centric company.5 !urt,er/ Ama+on is

gui0e0 -y 1our principles> customer o-session rat,er t,an competitor 1ocus/

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passion 1or invention/ commitment to operational excellence/ an0 long4term

t,in(ing.5 6!orm %4758Customer *bsession 

One o1 Ama+on*s gui0ing principles is customer o-session ;,ic, t,e company

0enes as o-sessing over its customers in or0er to provi0e t,em ;it, compelling

value -y o:ering customers somet,ing t,ey simply coul0 not get any ot,er ;ay.5

In or0er to 0o t,is/ Ama+on 1ocuse0 on improving its ;e-site an0 s,opping

experience an0 en,ancing its pro0uct o:erings/ among ot,er actions. Ama+on

measures its customer o-session t,roug, year4to4year sales gro;t,/ cumulative

customer accounts/ t,e percentage o1 or0ers 1rom repeat customers/ an0 au0ience

reac,. 69e+os8assion for Invention

Anot,er one o1 Ama+on*s gui0ing principle is its passion 1or invention ;,ic, is

evi0ent -y its pro0uct an0 service o:erings/ suc, as Ama+on !ire/ 7in0le/ or Ama+onPrime. Similar to its customer o-session principle/ Ama+on is intereste0 in

improving or provi0ing ne; pro0ucts an0 services to its customers to ;,ic, t,ey

may not ,ave access ot,er;ise. In or0er to 1ulll t,is gui0ing principle/ Ama+on

must researc, consumer 0eman0s an0 its customer*s pre1erences/ ;,ic, it can 0o

t,roug, its ;e-site analytics. Alt,oug, Ama+on 0oes not provi0e ;,at it uses to

measure its passion 1or invention/ its researc, an0 0evelopment expen0itures coul0

-e one ;ay to trac( it.Commitment to *perational Excellence

Ama+on*s t,ir0 gui0ing principle is its commitment to operational excellence

;,ic, is easily o-serve0 -y its ac<uisitions over t,e years/ suc, as t,at o1 7iva

Systems/ ;,ic, is no; (no;n Ama+on 'o-otics. Ama+on*s commitment to

operational excellence can -e 0ene0 as its constant 0esire to improve operational

e?ciency. !or example/ Ama+on improve0 its e?ciency in its 1ulllment centers -y

using ro-otics to assist 1ulllment ;or(ers -y -ringing t,e re<uire0 pro0ucts to

Ama+on*s employees to veri1y/ pac(/ an0 sen0 out 1or s,ipment. Again/ ;,ile

Ama+on 0oes not provi0e ;,at it uses to measure its commitment to operational

excellence/ it can -e trac(e0 -y or0er 1ulllment time/ num-er o1 0ays to get an

or0er to t,e customer/ or certain costs suc, as t,ose relate0 to over,ea0.+ong-term "hinking 

Ama+on*s principle o1 long4term t,in(ing is measure0 -y t,e value t,e

company creates 1or its s,are,ol0ers over t,e long term. Accor0ing to t,e

company*s %==J Fetter to S,are,ol0ers/ ;,ic, CEO He: 9e+os attac,es to t,e most

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current Fetter to S,are,ol0ers every year/ Ama+on*s long4term t,in(ing is a 0irect

result o1 our a-ility to exten0 an0 soli0i1y our current mar(et lea0ers,ip position.5

Ama+on*s mar(et lea0ers,ip position/ an0 t,ere1ore long4term t,in(ing/ can -e

measure0 t,roug, customer an0 revenue gro;t,/ t,e 0egree to ;,ic, our

customers continue to purc,ase 1rom us on a repeat -asis/ an0 t,e strengt, o1 our

-ran0.5 69e+os8Critical Success $actors ecessary to $ulll !ma'ons #ission and /uiding

rinciplesA1ter i0enti1ying an0 0ening Ama+on*s gui0ing principles/ its critical success

1actors -ecome evi0ent> to improve its ;e-site an0 s,opping experience/ to

en,ance its existing pro0uct o:erings/ to improve or provi0e ne; pro0ucts an0

services not ot,er;ise availa-le to t,e mar(et/ to improve operational e?ciency/

an0 to gro; its mar(et lea0ers,ip position/ as illustrate0 in t,e gure -elo;.

!ma'ons *ptions for $urthering Its #ission and /uiding rinciplesAma+on can continue to improve on its critical success 1actors -y

implementing t;o integration strategies into its operations> ,ori+ontal an0 vertical

integration. ori+ontal integration occurs ;,en a company/ suc, as Ama+on/

ac<uires competitors ;it,in its in0ustry/ ;,ereas vertical integration re<uires t,e

company to -uy eit,er its suppliers 6also (no;n as -ac(;ar0 integration8 or its

0istri-utors 6as (no;n as 1or;ar0 integration8.As note0 a-ove/ Ama+on ,as alrea0y -egun vertical integration ;,en it

purc,ase0 7iva Systems. Instea0 o1 purc,asing ro-otics 1rom or agreeing to

0evelop a ro-otics line 1or Ama+on*s nee0s ;it, 7iva Systems/ Ama+on 0eci0e0 to

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purc,ase t,e ro-otics supplier. Doing so ,as allo;e0 Ama+on to improve its

services an0 to improve its operational e?ciency -ecause Ama+on ;as a-le to

o-tain all o1 7iva Systems* core competencies 0uring t,e ac<uisition t,at ;oul0

,ave ta(en Ama+on years to 0evelop as it trie0 to 0esign an0 -uil0 a ro-otics

system to improve its operations in Ama+on ;are,ouses. oing 1or;ar0/ Ama+on

coul0 consi0er a 1or;ar0 integration strategy ;,ere-y t,e company ac<uires one o1 

its 0istri-utors. W,ile Ama+on ,as attempte0 t,is ;it, its use o1 0rones/ t,e

company coul0 consi0er purc,asing a more tra0itional 0istri-utor suc, as DF.Ama+on coul0 also engage in ,ori+ontal integration in or0er to 1ulll its

o-ectives o1 gro;ing its mar(et s,are an0 en,ancing its pro0uct o:erings. Ama+on

coul0 consi0er -uying some o1 its competition/ li(e Craigslist or e9ay/ or a similar

company ;it, a slig,tly 0i:erent mar(et an0 operating strategy suc, as Etsy. Etsy

is anot,er online mar(etplace ;,ere sellers list t,eir items in t,eir respective s,ops/,o;ever/ unli(e Ama+on/ Etsy*s s,ops typically consist o1 ,an0ma0e goo0s/ suc, as

 e;elry/ posters/ art/ etc. Ac<uiring Etsy or a company o1 li(e ;oul0 certainly

en,ance Ama+on*s pro0uct selection -y o:ering a -outi<ue s,opping experience

online instea0 o1 ust searc,ing 1or a particular item/ li(e a text-oo(. A00itionally/

investing in a company li(e Etsy ;oul0 also increase its mar(et s,are -y ac<uiring

all o1 Etsy*s existing customers. T,ese strategies ;ill ,elp Ama+on continue to

ac,ieve 1actors t,at are critical to t,eir overall success.

(I. IS0I" !ssessment

 T,e In1ormation Systems an0 In1ormation Tec,nology Assessment ;ill loo( at

t,e 1ollo;ing areas> in1rastructure/ net;or( capacity/ legacy systems/ arc,itectural

innovation/ green computing/ an0 caution L in1rastructure costs.

Infrastructure

Ama+on We- Services/ also (no;n as AWS/ is a su-si0iary o1 Ama+on.com

t,at provi0es clou0 services. !or many companies t,at utili+e AWS/ t,eir

in1rastructure is in t,e clou0B ,o;ever/ 1or Ama+on/ t,eir in1rastructure is AWS/

;,ic, means t,at t,ey are responsi-le 1or t,e p,ysical plant/ server ,ar0;are an0

so1t;are/ maintenance/ an0 personnel. To 0eliver t,is in1rastructure to ot,er

companies an0 t,emselves/ t,ey ,ave -uilt eleven ;orl04;i0e regions/ eac, ;it,

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multiple 0ata centers. T,is not only provi0es services to ;,ere t,ey are nee0e0

geograp,ically/ -ut also serves as a re0un0ancy in case t,ere is a system 1ailure or

overloa0 6!igure %8.

$igure 12 !)S )orld%ide et%ork 3ackbone

et%ork Capacity

Ama+on*s net;or( capacity continues to gro; at an exponential rate.

Accor0ing to Hames amilton/ Vice Presi0ent an0 Distinguis,e0 Engineer o1 Ama+on

We- Services> Every 0ay/ AWS a00s enoug, ne; server capacity to support all o1 

Ama+on*s glo-al in1rastructure ;,en it ;as a J9 annual revenue enterprise5

6amilton8. To support all o1 t,is gro;t,/ Ama+on ,as ac<uire0 a00itional 0ata

center sites aroun0 t,e ;orl0/ inclu0ing Irelan0/ Virginia/ an0 Oregon 6Killer8. Wit,

over one million active AWS customers/ Ama+on ,as ve times t,e clou0 capacity in

use t,an 1ourteen o1 t,e ot,er top provi0ers com-ine0 6amilton8.

+egacy Systems

Wit, t,eir legacy Oracle 0ata-ases/ Ama+on struggle0 ;it, maintaining

relia-le -ac(ups as t,e <uantity an0 si+es o1 t,e 0ata-ases continue0 to gro;. Wit,

t,eir legacy tape -ac(up system/ managing tape ,ar0;are/ 0ata center space/ an0

licensing 1ees 1or t,e tape so1t;are represente0 signicant capital expen0itures.

Operating expenses ;ere also signicant/ ;it, resources assigne0 to managing

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tape in1rastructure instea0 o1 ot,er ,ig,er value proects. Wit, t,ese -usiness

c,allenges/ Ama+on replace0 t,eir legacy -ac(up system in 1avor o1 t,eir clou0

storage solution/ Ama+on Simple Storage Service 6also (no;n as Ama+on S38. Wit,

Ama+on S3/ t,ey re0uce0 complexity an0 capital expen0itures/ improve0 -ac(up

an0 restore per1ormance/ eliminate0 t,e nee0 1or purc,ase an0 storage o1 -ac(up

tapes/ an0 1ree0 up valua-le ,uman resources 6Ama+on.com8.

!rchitectural Innovation

Wit, arc,itectural innovation/ companies recongure t,eir systems 1or t,eir

specic nee0s. To support t,eir 0ata centers/ Ama+on customi+e0 t,eir o;n servers

an0 so1t;are to accommo0ate t,eir uni<ue nee0s relate0 to t,eir expan0ing gro;t,

an0 glo-al environment. T,is rapi0 pace o1 innovation continues to expan0/ ;it,

over ne; services or 1eatures intro0uce0 in 2% 6amilton8. T,e innovations

0evelope0 over t,e years inclu0e> mo0ular in1rastructure/ AWS custom servers an0

storage/ an0 Ama+on Data-ases.

Modular Infrastructure

Ko0ular in1rastructure provi0es an e:ective ;ay to scale an0 0eploy servers

on a massive scale. To po;er t,eir clou0 computing plat1orm/ Ama+on uses

mo0ular 0ata center 0esign/ name0 a Per0ix container 6Killer8. Similar in si+e to a

s,ipping container/ eac, one ,ouses servers/ po;er 0istri-ution/ an0 VAC 6!igure

28.

$igure 42 !ma'on5s erdix Container

 AWS Custom Servers and Storage

Instea0 o1 using commercially availa-le servers an0 storage/ Ama+on ,as

0esigne0 t,eir o;n to t t,eir speciali+e0 nee0s. Gsing custom Intel processors t,at

,ave a 1aster cloc( spee0 t,an ;,at is commercially availa-le/ t,ey are a-le to

create servers optimi+e0 1or a specic tas( or ;or(loa0. Met;or(ing an0 storage

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are also customi+e0 1or t,eir ;orl04;i0e 0ata centers to meet t,eir strict

per1ormance an0 1ailover nee0s.

 Amazon Databases

'elational 0ata-ases/ suc, as Oracle/ SNF Server/ an0 D92 are expensive an0

0i?cult to a0minister. !or t,eir clou0 environment/ Ama+on create0 t,eir o;n

0ata-ases/ DynamoD9 an0 Aurora/ to a00ress t,e cost/ a0ministration/ an0 scaling

issues. Wit, t,eir numerous 0ata centers/ t,e 0ata-ases are replicate0/ provi0ing

near instant 1ail4over i1 nee0e0.

/reen Computing

reen computing is t,e environmentally responsi-le an0 eco41rien0ly use o1 

computers an0 t,eir resources 6Tec,ope0ia8. One measure o1 green computing is

Po;er Gsage E:ectiveness/ also (no;n as PGE/ ;,ic, is a ratio o1 t,e total 0ata

center 1acility energy to t,e IT e<uipment energy 6t,e green gri08. Gsing t,is

measurement/ Ama+on appears to em-race t,is social responsi-ility/ claiming t,eir

in1rastructure po;er usage e:ectiveness 6PGE8 is aroun0 %.2/ ;,ic, is lo;er t,an

t,e in0ustry stan0ar0 average o1 %.J 69arr8. o;ever/ t,ere are ot,er met,o0s o1 

measuring green computingB in a00ition to measuring ,o; e?cient a 0ata center is/

companies may also measure ,o; clean5 t,eir source o1 po;er is/ too. In t,eir

2%) company scorecar05 6!igure 38/ t,e environmental agency reenpeace rate0

Ama+on a clean energy in0ex o1 23@ an0 an energy transparency rating o1 !5

6reenpeace8. Ama+on remains on reenpeace*s -lac(list/ ;it, a poor clean energy

in0ex an0 a perceive0 lac( o1 transparency regar0ing t,eir energy 1ootprint 699C8.

reen computing is -ecoming more an0 more important to t,e socially responsi-le

investor/ an0 t,is -a0 pu-licity can -e o1 concern to Ama+on.

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$igure 62 /reenpeace 4718 Company Scorecard

Caution 9 Infrastructure Costs

As note0 earlier/ ot,er companies move t,eir net;or( in1rastructure to t,e

clou0 to re0uce capital expen0itures an0 p,ysical plant. !or Ama+on/ ,o;ever/

anot,er company*s clou0 is t,eir p,ysical in1rastructure/ an0 t,ey nee0 to

continually 1un0 an0 maintain t,ese systems. Accor0ing to !or-es/ t,ere is a

concern ;it, t,e su-stantial 0epreciation expense o1 3.3 -illionB alt,oug,

0epreciation is a non4cas, expense/ it 0oes represent a cost o1 0oing -usiness.

!urt,ermore/ purc,ases o1 property an0 e<uipment totale0 3. -illion in 2%3.

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 T,ese costs contri-ute to Ama+on*s su-stantial 0e-t/ an0 are o1 potential concern

1or investors 6Trainer8.

(II. IS $unction

Ama+on*s in1ormation systems ,ave -een create0 to ;it,stan0 a 0aily inuxo1 0ata ;,et,er it is a-out pro0ucts/ purc,ases/ or customer in1ormation. At t,e

,eart o1 t,e company/ Ama+on*s in1ormation systems collect customer in1ormation

suc, as purc,ases/ -irt,0ays/ an0 anniversaries/ ;,ic, ,elp Ama+on create

relations,ips ;it, its customers. !or instance/ ;,en 0ata is collecte0 on customer

purc,ases/ Ama+on can cater its pro0uct o:ering to its -uyers an0 even suggest

purc,ase recommen0ations to s,oppers. T,is/ in turn/ ,elps to -oost customer

retention rates. T,e company*s reliance on its customer relations,ip management

is an integral part o1 its in1ormation systems an0 ena-les Ama+on to outs,ine its

competitors in customer service.

(III. IS (ision

Ama+on*s vision statement is ;e see( to -e Eart,*s most customer4centric

company 1or 1our primary customer sets> consumers/ sellers/ enterprises/ an0

content creators5 6Ama+on.com8. T,eir tec,nology vision is (ey 1or 0elivering value

to t,eir customers. ere are some examples o1 ,o; Ama+on is 1or;ar0 t,in(ing in

t,eir vision> 0rone 0elivery/ Ama+on store/ an0 Internet o1 t,ings.:rone :elivery

Alt,oug, it seeme0 to start out as a pu-lic relations gimmic(/ 0elivering

pac(ages via 0rones is still part o1 t,eir vision 6!igure 8. aving receive0

permission 1rom t,e !e0eral Aviation A0ministration 6!AA8 1or experimental test

ig,ts/ Ama+on is t,in(ing a-ove an0 -eyon0 tra0itional 0elivery. Mame0 Ama+on

Prime Air/ t,eir recent patent application 0escri-es an option calle0 -ring it to me/5

;,ere a pac(age ;oul0 -e 0elivere0 to t,e customer -ase0 upon t,e PS location

o1 t,eir mo-ile 0evice ;it,in t,irty minutes. 7eep in min0 t,at t,e location o1 t,ecustomer can c,ange over t,e course o1 t,e 0elivery/ an0 can -e on lan0 or on sea

6Kars,8. Truly t,in(ing out o1 t,e -ox5 on 0elivery options/ t,is is an example o1 

ra0ical tec,nology innovation.

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$igure ;2 !ma'on drone

!ma'on Store

Alt,oug, t,ere ,ave -een 1alse reports over t,e years o1 Ama+on stores

opening up 6t,e most recent one in Kan,attan8/ t,ey ,ave nally opene0 an actual

p,ysical store on t,e campus o1 Pur0ue Gniversity in West Fa1ayette/ In0iana

6Smit,8. Primarily a pic(up an0 0rop4o: location/ stu0ents can place or0ers via

Ama+on Stu0ent/ an0 receive t,eir or0ers ;it,in one 0ay. Similarly/ Ama+on ,as

also opene0 its rst p,ysical -oo( store/ name0 Ama+on 9oo(s. Focate0 in Seattle/

t,e store ;ill ,ig,lig,t -oo(s -ase0 on customer ratings an0 popularity.

!urt,ermore/ customers ;ill -e a-le to test 0rive tec,nology pro0ucts/ inclu0ing t,e

7in0le/ Ec,o/ !ire TV/ an0 !ire Ta-let 6Al-a8. Alt,oug, t,e stores appear to 1ollo; in

t,e 1ootsteps o1 Apple an0 9arnes an0 Mo-le/ t,ey may in0ee0 result in 1uture

gro;t, o1 t,eir customer -ase/ attracting customers ;,o pre1er s,opping in -ric(

an0 mortar5 stores instea0 o1 via t,e internet.

Internet of "hings

In t,is era o1 t,e internet o1 t,ings/5 more an0 more 0evices -ecome

net;or(4connecte0 every 0ay. Ama+on*s vision is aligne0 ;it, t,is/ an0 is evi0ent in

t,eir pro0ucts 6iggin-ot,am8> 0as, -uttons/ Ama+on Ec,o/ an0 ome Services.

Dash Buttons

Ama+on*s Das, 9uttons provi0e an easy ;ay 1or customers to or0er specic

pro0ucts via an internet4connecte0 -utton 6!igure )8. Currently/ t,is Wi4!i4-ase0

-utton can -e congure0 to or0er one o1 %J -ran0s/ inclu0ing 9ounty/ Ti0e/ illette/

Cottonelle/ an0 la0. T,ey are also ;or(ing ;it, companies to -uil0 re4or0ering

-uttons into t,eir ,ar0;are/ suc, as 9rot,er 61or in( an0 toner8/ 9rita 61or ;ater

lters8/ an0 W,irlpool 61or laun0ry supplies8.

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$igure 82 !ma'on :ash 3utton

 Amazon Echo

 T,e Ec,o is Ama+on*s ans;er to Apple*s Siri virtual assistant/ -ut 1or t,e

,ome. Gsing voice comman0s/ it can provi0e in1ormation/ play music/ rea0 t,ene;s/ c,ec( sports scores an0 ;eat,er/ an0 turn o: t,e lig,ts. T,is pro0uct ;ill

continue to evolve as more connecte0 0evices are availa-le 1or t,e ,ome.

$igure <2 !ma'on Echo

Home Services

In anot,er example o1 ,o; Ama+on is trying to -ecome more vertically

integrate0/ t,ey ,ave intro0uce0 ome Services/ ;,ic, provi0es pro1essional

installation 1or 0evices an0 ot,er ,an0yman services. Currently only availa-le in

select geograp,ical areas/ it is part o1 Ama+on*s vision 1or complete customer care/

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an0 is an example o1 t,eir increasingly expan0ing vertical an0 ,ori+ontal

integration.

I=. >isk !nalysis

!ma'ons success is highly reliant on its information technology andrelated systems.  3ecause of this fact, !ma'on is exposed to additional

risks  less tec,4savvy companies may not 1ace/ inclu0ing t,e e:ects o1> system

interruption an0 lac( o1 re0un0ancy/5 0ata loss or ot,er security -reac,es/5 an0

su-optimal 1ulllment an0 0ata center operations 6!orm %4758.

?System Interruption and +ack of >edundancy@

Even t,oug, Ama+on ,as great in1ormation systems/ t,ere is an in,erent ris(

t,at t,e ;e-sites an0#or relate0 services ;ill experience 0elays or interruptions t,at

coul0 slo; or ,alt Ama+on*s operations ;,ic, ;ill prevent t,e company 1rom

e?ciently 1ullling or0ers or provi0ing services5 to ot,ers/ conse<uently resulting in

lost sales an0 attractiveness#reputation o1 t,e -ran0 6!orm %4758. T,is ris( can -e

minimi+e0/ ,o;ever/ as long as Ama+on continues to a00 so1t;are an0 ,ar0;are/

e:ectively upgra0es itsQ systems an0 net;or( in1rastructure5 an0 ot,er measures

to improve e?ciency ;it,in its systems 6!orm %4758.

?:ata +oss or *ther Security 3reaches@

9ecause Ama+on*s services are ;e-4-ase0 an0 t,e 1act t,at itQ processes/

stores/ an0 transmits large amounts o1 0ata5 suc, as personal 0ata 1or C'K

purposes/ t,ere is a possi-ility o1 0ata loss or ot,er -reac,es/ suc, as a ,ac(ing

attempt/ t,at coul0 expose Ama+on to su-stantial losses 0ue to lost revenues or

litigation/ among ot,ers 6!orm %4758. Ama+on minimi+es its exposure to t,is ris(/

,o;ever/ -y using a00itional t,ir0 party tec,nology an0 systems 1or a variety o1 

reasons/ inclu0ingRencryption an0 aut,enticationRcontent 0eliveryRan0Q -ac(

o?ce support/ an0 ot,er 1unctions5 6!orm %4758. Ama+on 1urt,er minimi+es t,is

ris( t,roug, t,e 0evelopment o1 systems an0 processes t,at are 0esigne0 to

protect customer in1ormation an0 prevent 0ata loss an0 ot,er security -reac,es5

6!orm %4758.

Suboptimal $ulllment and :ata Center *perations

Fastly/ as Ama+on*s customer -ase gro;s/ t,e company ;ill continue to a00

1ulllment/ ;are,ouse/ an0 0ata center capa-ility or a00 ne; -usinesses ;it,

0i:erent re<uirements5 ;,ic, ;ill cause its 1ulllment an0 0ata center net;or(s

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toQ -ecome increasingly complex an0 operating t,em -ecomes more c,allenging5

6!orm %4758. I1 Ama+on is una-le to a00 an0 ,an0le t,ese system c,anges/ t,e

company may -e una-le to a0e<uately sta: itsQ 1ulllment an0 customer service

centers5 or operate at optimal levels 6!orm %4758. o;ever/ ;it, proper planning

an0 use o1 researc, an0 0evelopment expen0itures to create complex/ yet

managea-le systems ;ill ,elp Ama+on to minimi+e t,is ris( 6!orm %4758.

=. orters $ive $orces

Competitive >ivalry - &igh

 T,e rst o1 Porter*s !ive !orces is competitive rivalry. Competitive rivalry is

typically ,ig, in an in0ustry ;,ere t,ere are lo; s;itc,ing costs incurre0 -y t,e

consumer. As 0iscusse0 earlier/ Ama+on ,as <uite a 1e; competitors e<ual in si+e L

some ;,o o:er only a portion o1 t,e services Ama+on o:ers an0 ot,ers ;,o ,ave a

very similar structure an0 pro0uct o:ering as Ama+on. T,ese competitors inclu0e

Metix/ Walmart/ an0 e9ay/ as ;ell as ot,ers li(e Ali-a-a an0 Etsy. Competitive

rivalry 1or Ama+on is ,ig, -ecause o1 t,e num-er o1 competitors it ,as an0 t,e lo;

s;itc,ing costs incurre0 -y users/ as ;ell as a ,ig, potential gro;t, rate 1or

competitors an0 me0ium to ,ig, costs to exit t,e in0ustry.

o%er of Suppliers - +o%

 T,e -argaining po;er o1 suppliers is li(ely to -e ,ig, ;,en t,ere are 1e;

suppliers o1 a particular goo0 or service or ;,en t,e s;itc,ing costs 1or t,e

company/ in t,is case Ama+on/ are ,ig,/ among ot,er reasons. T,e po;er o1 

Ama+on*s suppliers is <uite lo; since Ama+on relies upon a vast pool o1 suppliers 1or

its goo0s. 9ecause most o1 t,e goo0s sol0 t,roug, Ama+on can -e o-taine0

t,roug, multiple sources/ Ama+on can 0iscontinue contracts or partners,ips ;it,

suppliers ;,en t,eir terms -ecome unreasona-le or t,e <uality o1 t,e goo0s

0iminis,. A00itionally/ t,e costs o1 s;itc,ing or mo0i1ying contractual agreements

;it, suppliers are relatively lo; 0ue to t,e si+e o1 Ama+on an0 its relations,ip to its

suppliers.

o%er of 3uyers 9 #oderately &igh

 T,e -argaining po;er o1 -uyers is similar to t,at o1 suppliers/ -ut instea0 is

its inverse an0 0eals ;it, t,e pressure -uyers can inict on t,e seller. 9uyer po;er

is typically ,ig, i1 t,e consumer ten0s to ma(e large purc,ases an0 1e; ot,er

-uyers exist or i1 t,e -uyer can s;itc, provi0ers at relatively lo; costs. T,e

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-argaining po;er o1 -uyers is mo0erately ,ig, 1or Ama+on 1or a 1e; reasons> 6%8 lo;

s;itc,ing costs 1or consumers/ 628 little to no 0i:erentiation o1 pro0ucts sol0

t,roug, Ama+on 6suc, as a text-oo(8/ an0 638 t,e availa-ility o1 t,e same or similar

service 6li(e Metix or e9ay8.

"hreat of Substitutes 9 #oderately &igh

 T,e t,reat o1 su-stitutes exists i1 competitors ;it,in t,e in0ustry sell similar

goo0s t,at ac,ieve t,e same inten0e0 goal o1 t,e existing goo0 or service.

W,et,er or not t,e t,reat o1 su-stitutes is ,ig, 1or Ama+on 0epen0s on 1actors suc,

as s;itc,ing costs/ price o1 su-stitutes/ an0 -ran0 loyalty/ etc. T,e t,reat o1 

su-stitutes 1or Ama+on is mo0erately ,ig,. T,is 1orce leans to;ar0 ,ig, since t,e

goo0s sol0 t,roug, t,e mar(etplace lac( 0i:erentiation an0 can -e purc,ase0

else;,ere/ as 0iscusse0 0irectly a-ove. o;ever/ t,e t,reat o1 su-stitutes is only

moderately  ,ig, -ecause t,ere are 1e; ot,er companies ;,o o:er all o1 t,e same

services in one place as Ama+on. !or example/ ;,ile e9ay o:ers a mar(etplace to

connect -uyers an0 sellers/ it 0oes not o:er t,e same selection as Ama+on/ nor

0oes its o:er music an0 movie streaming/ text-oo( rentals/ etc.

"hreat of e% Entrants - +o%

 T,e 1t, 1orce o1 Porter*s !ive !orces is t,e t,reat o1 ne; entrants. T,e t,reat

o1 ne; entrants is typically ,ig, ;,en competitors can easily enter into t,e rm*s

mar(et. In or0er to 1or t,e t,reat o1 ne; entrants to -e lo;/ t,ere ,ave to -e

signicant -arriers to mar(et entry. As ;e ,ave learne0/ a -arrier to entry is an

o-stacle t,at ne; mar(et entrants must overcome in or0er to compete ;it,in a

particular mar(et/ suc, as ,ig, start4up costs or government regulations. T,e

t,reat o1 ne; entrants into Ama+on*s in0ustry is lo; since t,ere are ,ig, -arriers to

entry/ inclu0ing start4up costs an0 government regulations/ an0 a very lo;

possi-ility t,at ne; entrants ;oul0 -e a-le to ac,ieve t,e same economies o1 scale

rapi0ly enoug, to compete ;it, Ama+on.

I" Competitive !dvantage

As ;e ,ave 0iscovere0 1rom our analysis o1 Ama+on*s structure/ its strengt,s/

;ea(nesses/ opportunities/ an0 t,reats/ as ;ell as Porter*s !ive !orces/ Ama+on*s

competitive a0vantage relies on its tec,nology. As ;e ,ave learne0 in class/ a

competitive a0vantage is somet,ing t,at/ in t,is case/ Ama+on 0oes -etter t,an any

o1 its in0ustry competitors. Tec,nology is Ama+on*s competitive a0vantage since its

systems coor0inate its every0ay operations/ suc, as processing or0er re<uests to

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optimi+ing s,ipping to trac(ing customer 0ata 1or its customer relations,ip

management/ an0 can -e sol0 to ot,er users/ as is evi0ent -y Ama+on*s use o1 its

o;n clou0 computing system an0 its a-ility to sell its sel140evelope0 clou0 storage

capacities to ot,ers as a service. T,e e?ciencies o-taine0 1rom all o1 t,e

tec,nological support o1 Ama+on*s in1ormation systems an0 relate0 tec,nology are

t,e reasons Ama+on ,as -een a-le to (eep its costs lo;/ learn its consumers*

pre1erences/ an0 expan0 its operations 1rom -oo(s to a one stop s,op 1or

everyone*s nee0s.

=I. Conclusion

Ama+on is an incre0i-ly innovative/ large/ an0 po;er1ul company in an

in0ustry slig,te0 1or ,ig, gro;t, in t,e 1uture ;it, little reliance on or inuence

1rom its suppliers an0 a lo; t,reat o1 ne; entrants. A1ter i0enti1ying some o1 its

strengt,s/ ;ea(nesses/ opportunities/ an0 t,reats/ as ;ell as some ris(s an0 t,e

1actors critical to its success/ Ama+on ;ill -e a-le to surpass in0ustry gro;t, rates i1 

it ta(es a0vantage o1 t,e its incre0i-le IS an0 IT structures an0 t,e opportunities

an0 potential alternatives to it/ suc, as expan0ing its Kar(etplace s,op o:erings or

parta(ing in mergers an0#or ac<uisitions to ena-le t,e company to integrate its

operations/ ;,et,er vertically/ ,ori+ontally/ or -ot,. Ama+on is a-le to e:ectively

,ave its ,an0s in everyt,ing -y provi0ing a variety o1 goo0s an0 services/ ranging

1rom its clou0 tec,nologies to tangi-le pro0ucts/ li(e -oo(s to movie streaming/ an0

;ill continue to gro; as it maintains an0 0evelops more o1 its tec,nological core

competencies.

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Wor(s Cite0

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2%). We- site. % Movem-er 2%).

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