Amazon.com Company Management Information Systems

Globalization can be credited for causing significant alterations in the way business is conducted and the increasingly competitive and constantly changing business environment. In many large corporations, it is not easy to detect strategic issues that confront business operations. It is also difficult to develop sustainable programs that steer organizational success. However, the advent of computers and information technology makes it easy to prepare strategic plans that facilitate the growth and success of companies. An ‘MIS’ is a strategic system that aids in the collection, analysis, dissemination, and storage of organizational data in the mode of information required to implement management functions (McLeod & Schell, 2007).

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Amazon.com has persisted in its innovation, especially in business strategy and information systems. In this research paper, I address some of the ways that the company connects these two aspects of business as well as the huge investments it makes in information systems and security of data. I conducted the research by consulting some peer reviewed sources as well as interviewing two employees of Amazon.com (Dave Schappell and Jeff Wilke).

Management Information Systems (MIS) are concerned with “planning for, development, management, and use of information technology tools to help people perform all tasks related to information processing and management” (Haag & Cummings, 2008, p. 29). MIS aids in planning by offering the necessary information that assists in firm decision-making, especially in large organizations where the managers cannot exert direct control over all operations. It also reduces data overload by changing the bulk of data in a condensed form. In doing this, MIS eliminates the confusion that is often associated with excessively detailed facts. MIS also encourages decentralization and coordination by providing a platform for the monitoring of work at the lower levels.

Case Analysis

An example of a company that utilizes MIS to steer growth and management is Amazon.com, which is a major e-commerce company based in Seattle. In 1995, Jeff Bezos, who was an investment banker by profession, saw an opportunity in the unexploited internet sphere. He established a site that sold directly to customers over the internet. The company achieved a major milestone by becoming one of the very first large-scale retail enterprises to make sales over the internet. According to one of its employees, Jeff Wilke, the company made over $4 billion from its online revenues (Personal communication, January 10, 2014). Over the years, Amazon.com has metamorphosed into one of the most influential internet retailers by using MIS.

Amazon.com’s Exploitation of IT in Decision Making

With computers permeating all areas of human life, there is rarely any company or business franchise that does not extensively depend on IT systems. However, there are certain fields that rely to a large extent on MIS. The kind of e-commerce that is carried out at Amazon.com is one such field. Managing information is a vital resource for effective delivery of several managerial operations at different organizational levels (O’Brien, 2009). Management processes that are facilitated by the application of information technology at Amazon.com include controlling, planning and decision making.

MIS aids in the decision making process at Amazon.com by providing the required information in an updated and accurate form needed in an up-to-date and accurate system. The benefits of IT in decision making, therefore, include the usability of the information provided and timeliness of delivery of information. It also includes delivery of information to those who need it.

According to Schappell, Amazon.com offers its top-notch e-commerce programs to other dealers and to private retailers (Personal communication, January 15, 2014). As a matter of fact, many established retail companies and private dealers boost their sales by leveraging the stage provided by Amazon.com’s e-commerce. By manipulating programs such as Marketplace and Advantage, Amazon.com has managed to stay on top of the online retail business and to offer a wide selection of items to its customers on the e-commerce platform.

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Amazon.com manipulates MIS systems to convert data into information that aids in the decision making process. The company achieves success in its implementation of an integrated system through the web by properly operating the information system and upholding its technical and application system. From the interview with Dave Schappell, one of Amazon.com’s employees, it is evident that IT is the core of business at Amazon.com (Personal communication, January 15, 2014). Proper manipulation of information technology results in increased profits (McLeod & Schell, 2007). The recent trend of profitability indicates that the management at Amazon.com has stayed on top in terms of their leverage of information technology.

At Amazon.com, MIS systems are valuable as they use the raw data to administer simulations. These simulations are useful in predicting possibilities and ‘what if’ scenarios. One such use of MIS at Amazon.com is in the projection of the impact of price change on sales of merchandise. The Decision Support Systems (DSS) implemented at Amazon.com facilitate decision making and cannot be achieved without MIS systems.

MIS For Data Analysis and Strategic Direction at Amazon.com

Amazon.com uses MIS systems to organize massive volumes of data into coherent reports. These organized data are easily understood by managers and make strategic planning easy. Managers identify information patterns and financial patterns that can aid in strategic planning for growth by examining the reports and statements (Gefen & Straub, 2000). Like most companies, Amazon.com faces its fair share of challenges in satisfying the needs of its customers, and its distribution channels. The company addresses these challenges using high-tech software that allow the company to homogenize procedures on its back-end systems while still delivering quality and personalized services to its customers.

Customers gain access to the company’s systems using their client of choice, such as a mobile device, a web browser, or a procurement system. This level of interaction is referred to as the presentation layer. On the next layer (application layer), Amazon.com’s commerce logic is controlled by a company resource planning system. The demanding data collection and management that takes place during the procurement process is governed by a tier of databases called the data layer. Data at Amazon.com is retrieved and analyzed without the hustle of lengthy manipulation and processing. All the three tiers and systems are reinforced by several technological applications that ensure effectiveness of the systems and teamwork on the part of employees.

Technology Used at Amazon.com

The company design at Amazon.com in done in such a way that the growth of the business is driven by technological innovation. The technology used allows the company to offer a variety of products at relatively low prices. One of Amazon.com’s notable technological innovations include Search Inside the Book, which allows clients to have personalized experience while shopping for books. Another innovation is known as 1-Click Shopping, which allows customers to purchase goods on the internet using one click of the mouse based on the information generated from the customers’ previous entries. The customers are saved from buying items using the shopping cart. Other innovations provided by Amazon.com include Wish List and Listmania, which help customers to identify new items and make advised choices.

One advantage that Amazon.com has in the e-commerce market is its ability to manage its information systems efficiently. According to Wilke, Amazon.com develops its information systems as a solution to the management challenges that arise during business (Personal communication, January 10, 2014). The company has built its core framework founded on a Service Oriented Architecture (SOA). This system supports sustained growth while not compromising performance. The SOA enables the company to construct several software components. It is a complete, systematically distributed and devolved service program that operates several applications (Bhattacherjee, 2001).

How Amazon.com Responds to Competition

Competition brings out the best in any business franchise. Amazon.com faces strong competition in its online market from other e-commerce companies such as eBay and Yahoo! who have honed their use of information systems and are constantly churning out new products and services. Another company that poses the greatest competition to Amazon.com is Google. The threat from Google is mainly due to the fact that many online consumers manipulate its search engine. Google has also expanded to other e-commerce services.

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Every strong company must possess at least one core competency. This competency is the service which the company excels at offering. By constructing a robust management information system, Amazon.com can manage to obtain an edge over its competitors. MIS systems can offer Amazon.com the tools that are needed to understand the e-commerce market better than its competitors.

To stay ahead of competition, Amazon.com offers new products such as digital mapping, online short stories and other services aimed at improving the client experience. In addition, the company constantly enhances the design, content and usability of its website. It endeavors to establish a digital relationship with all its customers, employees and suppliers. It is important to note that the changes made at Amazon.com for the purpose of improving sales and marketing experience are made deliberately by the company’s management.

Amazon.com has managed to manipulate the power of the internet and balance the models of interaction and hyper-linking in order to come up with a wide range of data for its customers and management. The virtual system created at Amazon.com offers a wider selection of book titles than can be found in any bookstore. Customers can browse through book titles, synopses and reviews, which help in making informed choices.

Information gathered from Wilke establishes that Amazon.com has set up two key systems that run its business systems (Personal communication, January 10, 2014). The Amazon Web Services (AWS), which was announced in 2002, gives developers unlimited access to the company’s advanced technological platform. The developers build applications based on the AWS, which helps run the company’s internet operations. The other business system at Amazon.com is the Amazon Simple Storage Service (S3). This system is constructed to enable easy web-scale processing. The S3 is also useful since it provides Amazon.com with dependable, fast, scalable, and cheap data storage. The S3 enables unlimited storage and recovery of information using a distinctive developer-assigned key.

Amazon.com has achieved great milestones in trying to conform to international laws regarding e-commerce. In trying to make the company relevant to the Chinese market, the company has rolled out an official Chinese website called Joyo. This is in an attempt to stay ahead of its competition, especially in the Asian market.

Amazon.com implements a flat and lean structure that enables it to be flexible and to achieve strategic planning. The company’s structure allows it to avoid the managerial dilemma that often accompanies branches or outlets. This also helps in reducing operational costs and decision making.

The company makes use of a Web-based Information System (WIS), which allows customers to access reasonable information while using the company website. The company gathers information from customers and other operations, then process this information. The information must be made available to users for the company to make its revenue.

How Amazon.com Handles Security Risks Created by IT

In e-commerce, security can be viewed from two different standpoints. With regards to software development, security is connected to the features of a program or system (McLeod & Schell, 2007). One security feature is to certify that confidential data is encrypted and that passwords contain over six characters. For users, protection is more against attacks from fraudsters and not certain aspects of the software system. A secure platform should allow confidentiality of information, availability of data and integrity of the information.

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Doing business over the internet exposes a company to many risks, especially concerning security of data and fraud. To deal with internet insecurity, Amazon.com has devised authentication mechanisms that guarantee the security of data from illegal access (Saunders, 2009). To make items public or private requires the permission of specific users. This ensures that fraudsters and identity thieves are kept at bay.

The Smart Analytic Search (SAS) system used at Amazon.com is designed to detect and eliminate or minimize cases of fraud. Since the system acts as a warehouse to huge amounts of data, it is built to gauge personalization of each customer. It also assesses the efficiency of Amazon.com’s services. The Smart Analytic Search is designed to detect internet fraud, which often involves credit card fraud. Amazon.com exploits SAS to study the behavioral trends of frauds. From these trends, the company can predict the probability of fraud and the likely targets.

Recommendations

Amazon.com should seek ways of improving its Web-based Information System since this is the portion of its structure with which customers interact. Such an improvement can take the company a step ahead of its main competitors in e-commerce and can improve its revenue basket. The survival of Amazon.com and its continued profitability depends on its ability to create a sustainable and flexible MIS that can adapt to the constantly changing e-commerce market.

Conclusion

It is safe to say that Amazon.com’s success lies in its procedure of collecting and storing information from customers and making informed decisions based on the analysis of such data. Though there is definitely room for improvement, especially regarding the company’s WIS, Amazon.com has devised mechanisms to ensure customer safety and continued relevance. The company constantly updates its information systems, which have been the core of its business success. The staff and management at Amazon.com believes that by constantly updating the information systems, the company is safely on the route to financial success and sustainable business growth. The security measures in place for the detection of internet fraud and protection of customers from fraudsters are also important to the company’s image and repute in the face of a highly competitive market.

References

Bhattacherjee, A. (2001). Understanding information systems continuance: an expectation-confirmation model. MIS Quarterly, 25(3), 351-370. Web.

Gefen, D. & Straub, D. (2000). The relative importance of perceived ease of use in is adoption: A study of e-commerce adoption. Journal of the Association for Information Systems, 1(8), 1-28. Web.

Haag, S. & Cummings, M. (2008). Management information systems for the information age (Laureate Education, Inc., custom ed.). Boston: McGraw-Hill/Irwin. Web.

McLeod, R. & Schell, G. P. (2007). Management information systems. New York, NY: Pearson Education. Web.

O’Brien, J. A. (2009). Management information systems- managing information technology in the internetworked enterprise. New York, NY: Irwin McGraw-Hill. Web.

Saunders, R. (2009). Business the Amazon.com way: Secrets of the world’s most astonishing web business. New York, NY: John Willey and Sons. Web.

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