BM2021
Name
Section
Date
P-M-I CHART
Amazon
Amazon typifies successful competition in the new economy far more than many firms. Some
would say that Amazon invented the internet retailing business model that all other dot-coms are
struggling to copy. Amazon understands the strategy of developing and maintaining customer
loyalty, which is the key to success in retail e-business, and implements it effectively (Blocher et
al., 2019).
Amazon has a loyal and growing customer base because of its reliable service and low cost. It
has recently been cited as a major factor in the bankruptcies of other companies such as Circuit
City (electronics retail company) and Borders (book and music retailer). Amazon also presents a
competitive threat to Walmart, OfficeMax, and other retailers. The reason: Shoppers find the
same product at lower prices and enjoy the convenience of online shopping. A recent study
showed that, on average, a Walmart product is 19% more expensive than at Amazon. Amazon
avoids the costs of maintaining retail facilities such as the Walmart stores. On the other hand,
Amazon does require shipping costs on some orders. To be competitive, Walmart has been
aggressively pushing online sales with very positive results. In response, Amazon is targeting
the Walmart customer base, for example, by offering online grocery sales (including delivery) to
food stamp recipients (Blocher et al., 2019).
Regardless of Amazon’s growing market share, the company is facing challenges in the delivery
of goods to its growing number of customers. It's no secret that the retail giant has been quickly
building up its logistics division to deliver the goods on its marketplace and set itself up as a
potential third-party logistics partner for other retailers. The buildup has resulted in Amazon
delivering a much higher portion of its own packages. In 2019, the company ships almost 48%
of its own packages, posing a significant increase from 15% just two (2) years ago, according to
Rakuten Intelligence, cited by Axios. This delivery buildup causes late deliveries and unsatisfied
customers. In 2017, from January to late June, an average of 4.6% of items were delivered late,
compared with an average of 16.6% in 2019, according to Rakuten Intelligence data cited by
Business Insider. If Amazon is unable to reverse this trend, it risks significant damages to its
brand reputation, especially as it continues to push the envelope by giving consumers even faster
delivery options (Aouad, 2019).
Requirements: (9 items x 5 points)
Using a strategic decision-making approach, formulate two (2) alternative courses of action
to help Amazon resolve its problem regarding late deliveries. Then, identify the advantages
and disadvantages of each proposal. In the Interesting box, write down how the company can
implement each course of action. In the My Decision box, provide a recommendation of the
most effective alternative and a suggestion on the evaluation/review approach that must be
adopted by Amazon.
02 Activity 1
*Property of STI
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BM2021
Name
Section
Date
Alternative 1:
Plus (Advantages)
Alternative 2:
Minus (Disadvantages)
Plus (Advantages)
Interesting
Minus (Disadvantages)
Interesting
My Decision
Rubric for grading:
CRITERIA
PERFORMANCE INDICATORS
Content
Provided pieces of evidence,
supporting details, and factual
scenarios
Organizatio Expressed the points in clear and logical
arrangement of ideas in the paragraph
n
of ideas
TOTAL
POINT
S
4
1
5
References:
Aouad. (2019). Amazon is facing challenges in its in-house logistics buildup.
https://www.businessinsider.com/amazon-facing-logistics-buildup-challenges-2019-7
Blocher, E., Jurds, D., Smith, S., & Stout D. (2019). Cost management: A strategic emphasis. McGraw-Hill.
02 Activity 1
*Property of STI
Page 2 of 2