KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

University of Wales (Kensington Collage of Business) MBA

MODULE TITLE: MANAGING INFORMATION SYSTEMS

ASSINGMENT TITLE: Critically evaluation of using of the Management Information Systems at Amazon.com

LECTURER NAME: CILLIERS DIEDERICKS

KCB ID: 14508 UoW ID: 1092227299339

DATE OF SUBMISSION: 02/06/2011

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KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

Question:
Amazon.com is a typical B2C company and it has been the USA`s largest online retailer. With the development of information technology and electronic business, purchasing online has become increasingly popular. The internal strategy focuses on how MIS helps the company itself to be more competitive in terms of functional management through enhancing efficiency by collecting customers` personal information more conveniently and controlling the logistics` system. You will be required to understand how to collect and deliver information, make decisions by analyzing the data and information, and critically evaluate how more efficient management and communication of information is achieved. For this report you are required to draw on this knowledge and look at the application and uses of MIS in other service based organisations and critically evaluate how this has helped them to improve their performance, followed by future recommendations (1000 1500 words) that will be beneficial to Amazon.

Introduction
In recent two decades retailing online has rapidly grown in the retail business. This growing, which is depended on the widespread improvements in the internet and information technology, caused the occurring of the term of electronic commerce, prefixed as e-commerce. E-commerce commonly includes the processes of selling and purchasing, delivering, marketing, servicing, developing and payment of the products and services via online. (Chaudhury and Kuilboer, 2001) It focuses on the internal and external activities of the commerce on the way of online with business partners and individuals by using the managing of the information systems. The company can benefit the advantages of being able to operate its business 7/24 all year, stepping the global market without border boundaries, reducing its operating costs and interacting with consumer to providing them convenient. Since the first application of e-shopping of Tesco on 1984 and the first application of 24 hour eshopping of Amazon.com on 1995 (Byers, 2006), e-commerce has been conducted with varies of types, such as Business to Business (B2B), Business to Consumer (B2C), Consumer to Consumer (C2C), Business to Individuals (B21) and so on. The burst of the dot.com bubble on 2000, which eliminates many internet based companies, has shown the importance of the improvement of the management information system to making decisions prudently and reasonably. (Cross and Miller, 2002) Management information system (MIS) refers to providing data, collecting in a systematic way, processing, storing, widening and enhancing of the information to execute the managing activities in an effective way and profitably. It objectives to facilitating the decision making, providing the essential information from entire sections, emphasizing the critical points, making reasonable decisions. (Anderson and Post, 2006) The MIS, ultimately goals the optimization, has to have the characteristics of providing relevant information for all levels of management from top to down, directing actively by the management, covering all the functions of the organization, having the common data flow to avoid the overlapping and reiteration, being in a long term planning at least 3 to 5 years, flexible and user friendly. It must not be forgotten that the well quality of the inputting data, well designing of the process and the system, and well managing of the processing system directly affect the quality of the necessary information which enables the organization to become productive and profitable. (O`Brien, 1999; McLeod et al, 2007; Beynon-Davies, 2009) 1

KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

This is assignment aims to understand, how MIS has been using at Amazon.com to collect data and deliver it as information, how reasonable decisions making has occurred and critically evaluate the managing of information system. A glance of the Amazon.com Amazon.com, the Seattle-based multinational e-commerce company, is the largest retailing online company with over tens of millions active customers and approximately three times the revenue against the closer competitor in the Internet sales, as of 2010. Earths biggest selection and to
be Earths most customer centric company is the vision of the company. (Spector,2002)

It has been founded by Jeff Bezos and has been gone online in 1995 by selling books. Jeff Bezos had thought that the ease in searching and browsing of hundreds of thousands of book titles in a short time could have been offered by only the Internet. The company soon has widened its selling by music industry products, electronics and technology industry products, appliances, automotive electronics, movie industry products, jewellery, watches, health care items, beauty products, clothing, furniture, food, toys and so on. The company has expended its e-commerce platform by establishing separate websites in UK, Canada, Italy, Japan, France, Germany, and China, which the countries use internet widely. It has also provided international fulfilment to some countries for some of products. The company has designed an e-business strategy such that the many technological innovations provide to offer hundreds of thousands of products at lower prices, in a single sitting shopping and in a short shipping time. The company`s e-business model has not only based on selling products but collaborating with its business partners and servicing its customers. In 2000s, the company has offered its e-commerce platform to individuals and the other retailers by launching Marketplace and Advantage programs that enable its partners to promote and sell their products directly on Amazon.com. It has provided the company to widening its product range and leveraging its power by world class retail brands. On the other hand, the company has improved its integrated system via internet by managing information system and has maintained technical and application system. By giving the opportunity to customers of less prices, widely selection and ease in, the company has had the success of gaining its popularity and becoming the world`s largest online retailer. (Saunders, 2002; McBrewster et al, 2009) It can be said that the secret of the company`s success lies under the operation of gathering and keeping the customers` information, and making the right decisions by analyzing these data and information. The company has developed an information system to collect and keep vast amounts of intimate information which has been voluntarily disclosed by its millions of customers. These voluntarily shared data allows Amazon.com the larger detailed profile of customers than any other retailers.

Business and Information Systems at Amazon.com

Amazon.com uses two main systems which have been developed for its e-business strategy to manage vast number of products and tens of millions of active customers. They have been mainly used for renting space on its e-platform to others. AWS (Amazon Web Service), announced on http://aws.amazon.com and S3 (Simple Storage Service), announced on http://aws.amazon.com/s3 Amazon Web Service has allowed the partner retailers, the individual sellers and the developers to advertise their products through the Amazon.com web site by building their web based applications in a reliable, scalable, and low cost way and gathering their data. At the same time, Amazon.com has widened its data and robust infrastructure cheaply and easily by releasing a variety of integrated

KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

web services. In addition, these services have provided Amazon.com to monitor all activities to analysing and making right decisions for its global e-business. The other system, Simple Storage Service has been designed to make web-scale computing easier for the business partners and the developers by web service interface to keep and receive any data, any time, from anywhere. S3 has also given Amazon.com the opportunity of accessing the same data storage for running its global e-business. It has known the world`s largest retailing data storage. Of course, this kind of vast storage bubbles the appetite of fraudsters. Amazon.com has also built a system, known as SAS (Smart Analytic Search), to allow detecting and decreasing the examples of fraud in Amazon web site by analyzing the behavioural patterns of fraudsters and designing the predictive scores. (IBM Redbooks, 2010) The SAS has also been designed for measuring the personalization of customers and analysing the effectiveness of how well Amazon.com serves its customers. (Kantardzic, 2003) The main features of, well-designed systems, S3 and SAS is as follows: It can be written, read and deleted that objects from 1 byte to 5 Gbyte. It can be stored that unlimited objects. It can be stored and received that objects through an assigned key. It can be ensured that information is kept secure from unauthorized access by providing authentication mechanisms. It can be easily added functional layers and protocols such as Torrent because of the flexibility. Amazon.com has been using thousands of open source software (Linux) based computers located in huge data centers in different locations all around the world to reduce pay licensing fees to MS. Amazon.com`s strength has been come from managing its information systems such as data, information, transaction and logistics process in a valuable way. It is believed that increasing profitability and creating value can only be performed by right investments on information systems and right management solutions to radical competitive business era. The mainframe of the company`s information system is focused on Service Oriented Architecture (SOA). SOA allows Amazon.com`s information system the opportunity to be ultra scalable, high performance, sustainable growth availability and enhancing wide range of software components independently and fastly. The system has focused on performing the end-data to keep more items, more consumers and more orders to reinforce the online sites. The attractiveness of this system is that it has been built to reuse of the information in multi-contexts and partial work instead of a bigger process. SOA is so comprehensive, and fully distributed and decentralized service platform that serves multi applications. So Amazon.com can vary its business models easily. (Krafzig et al, 2004; Erl, 2005) The Transaction Processing System is based on creating convenience for users. Customers have a personal account to directly log in the Amazon.com web site. They have their own personalized features such as Shopping Basket, Shopping Cart, Wish List and so on. One Click offers customer to avoid some steps in the check out process by submitting despatch / billing address and credit / debit card details. It provides customers shortcut with just one click to use despatch address and card information which are already in the system. In addition, The Honor system, Amazon.com`s online payment system, allows customers to pay via their Amazon account by controlled access. The basic of the transaction method is that Amazon.com customers have been asked to submit their despatch / billing address and credit / debit card details to be confirmed but pay later. The amount

KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

of payment has been automatically paid from the card, after the stuffs received by the customers. (Harris, 2006; Laudon and Laudon, 2009) Amazon.com has designed the Recommender System to give the relevant and useful information to the customers. It is based on customer`s past shopping and browsing behaviours, behaviors of other customers` who have behaved in a similar way, the item being purchased, customer similarity, and the combinations all of these. If it is glanced how the recommender system works basically, for instance, a fiction book has recommended other fiction books from the same author, and similar subjects from any authors of similar background and genre. Basically the Recommender System is based on Linking and Data Mining. There are a vast number of links which have been maintained among items and customers. These track whats been searched, what`s been browsed, what`s been viewed, whats been bought, etc. Complex computing programs process all the links in the system and designs tables that can be rapidly accessed and displayed. (Kantardzic, 2003) This recommendation system is very attractive for customers who really use it because of having a huger and more reliable pool than the smaller pool of reviewers. It is built to enhance the browsing experience of online shoppers and can rely on capturing a huge amount of data about customers, their shopping and browsing behaviors. This well designed complex recommendation system is a great thing that gives Amazon.com an opportunity being over its rivals. If it`s compared the traditional retailing and the online retailing which uses the information systems effectively: The shoppers are able to use the web site from anywhere at any time to buy a reliable product by less price. The shoppers have more convenience to get more reliable information about products. The shoppers have the opportunity to search online catalogues without leaving their homes or offices. It can be enhanced better communications between suppliers, sellers and shoppers. The sellers and retailers can collect and delivered more information about shoppers. The retailer have the opportunity to minimize costs regarding to staff, cleaning, building maintenance, rent, printing catalogues and so on. It can be said that Amazon.com successfully uses the main characteristics of managing Information Systems such as management oriented, management directed, integrated, common data flows, heavy planning element, flexibility and ease of use. It is management oriented because it is designed for using from the top to down. It is management directed because the developments are actively directed and encouraged by management. It is integrated because the system covers all functional areas of the business. It has common data flows concept because the designed system avoids overlapping and repetition. It is heavy planning element because there is a long term planning for developing the management of information systems. It is flexible and ease of use because the SOA has been designed to be flexible and ease of use. (Cummings and Haag, 2006) It can also be said that the success of the Amazon.com`s information system comes from the following reasons: All the data is processed and checked as it is occurred. All the accessed data is secured via authorization scheme. All back up data is taken to safeguard corruption and loss of data. The audition is make time to time to ensure that the system is not violated. The system is developed via a standardisation of designing and development. The system is controlled via programme control, process control and access control as it is processing. The information system is confirmed the consistency to business goals and processes.

KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

The management information system has also been used for gathering its Customer Relationship Management (CRM) by Amazon.com. The customers` information is collected, integrated, consolidated, analysed from all over the world, and then the results are distributed to customer touch points. The features, which are easily accessed by customers, allow Amazon.com to enhance its customers` satisfaction. (Chen and Popovich, 2003) More personalisation for customers` preference gets more success to Amazon.com. The company has also established call centres near the markets. For instance, there is a call centre in Ireland to serve UK and France web sites users. The call centres are used for handling orders, emails and phone calls. Amazon.com enhances its effectiveness in Customer Relationship management by using the management information system for coordinating the whole process. It occurs by relying on software and hardware systems in processing, gathering, and using data in a basic web remedy. In addition, the company periodically redevelops its web site, content and usability by digital touching with its partners, customers, and staffs. It`s obviously clear that this digital touch prevent Amazon.com from high direct marketing cost. Defining the more profitable product segments and customers make the company more profitable. The successful role of information system at Amazon.com`s e-commerce in B2C and B2B is based on how the company copes with the rapid changes of competitive global market by producing well matched product segments for its customers. The survival and the enhancement lay under how the company effectively realizes its strategic planning with the management information system to increase its revenue and effectiveness. The flat and lean structure of the company allows inflexible infrastructure by getting rid of branch offices and / or zone offices as if Amazon.com. Allowing employees to work from anywhere as customers and business partners are connecting from any where, provides Amazon.com to automate processes after redesigning and developing the information system. On the other hand, Amazon.com has tried to cope with international laws and processes challenges by regulating its e-business according to the different international systems, communication standards, region-based practises and security laws. For instance, the official web site of Amazon.com in China is Joyo.com which has totally different regulations based on the country. (It shouldn`t be forgotten that Google.com has still major problems in its China process). The cultural changes of the regions insist that the organisation has to act the different actions on different locations. The organisation will be effectively successful how the organisation collects and analyses the regional data. It means that Amazon.com does Think globally, act locally.

Conclusion
However, Amazon.com is the world`s leading B2C online company, it has been threatened by the brick-and-click companies, existing companies which has added web sites for e-retailing, such as Wall Mart, Tesco and Barnes & Noble, or other pure-click companies which increasing their geographical and product scope, such as e.bay.com, alibaba.com etc. Like all companies facing with the tough competitive and rapidly changing business world, Amazon.com requires sustainable and predictable improvements on its e-business and especially in its MIS. The sustainable improvement of its MIS for Amazon.com occur some necessities. Long term such as 3 to 5 years- well planning, predictable changing on the current situations, upfront costs, coping with tough difficulties at the competitive e-business world, coping with the suffers of integration of the widening millions of information which is needed by different levels of the organisation`s functions, quick decision making, requiring of well educated IT and non-IT staffs and so on.

KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

It can be easily said that Amazon.com has the world`s largest customer and product range information, which is given voluntarily by the consumers and its partners in the USA and the Europe. In the tough competitive and rapidly changing business world, Amazon.com must enhance its ebusiness through the emerging e-markets, such as China, India, Turkey, South American countries etc., the growing countries on the top 20 for using internet and internet based applications. However the consumer behaviours are a bit similar in USA and Europe, they can be differentiated in these emerging e-markets. For instance, Amazon.com has been facing some problems in China based on the different regulations and the lack of the knowledge about culture. The best way to entering these e-markets can be designing information gathering processing systems to have the behaviours of these e-markets` consumers. After gathering and processing the information, the e-business company must deliver the reasonable information to its users by Web based Information systems (WIS) to gain its revenue. The Web based information systems (WIS), allows users the reasonable information wherever and whenever they access the site, must be differentiated at least from region to region. Even if all the read books, articles and journals, which are related MIS, indicates that Amazon.com is one of the most successful MIS implementer, there could be some emerging improvements at Web based Information Systems to be more user friendly. The improvements to organizing and delivering the information in such a manner that the consumer received them on web site reasonably, rapidly and easily. The writer of this assignment, as an active user of Amazon.com web site, recommends Amazon.com that there should be some improvements on the shopping basket in such a way that being more user friendly and not wasting users time. When the user search a topic and select a product from the topic related list to add it to shopping basket, he/she can add it easily to his/her shopping basket. But the user can select and add only one product from a topic related list which he/she searched once. If the user wants to select and add more than one product from the topic related list, he/she must search the same topic again or facing the boundedness of recommendation of Amazon.com at the shopping basket web page. It seems like that a shopper which wants to buy more than one products from grocery section in a Tesco branch, picks up a bunch of banana, leaves it to till, then goes back again the grocery section to pick up one pack of cherry and repeats all the activities to buy numbers of items to finalize his/her shopping. It is clearly understandable that Amazon.com has designed its shopping basket in such a way that delivering more details about the chosen product. But this wasting time can be prevented by adding a click opportunity for all products which are listed at the topic searched web page. The user can click all the products which he/she wants to select, then can go to chosen product detailed web page to see the details of the products in one glance and then can add them in his/her shopping basket. After all this user friendly process the shopper can finalize its shopping by using the check out process. It can be recommended Amazon.com to enhance especially its Web based Information system (WIS), which is the visible face of its, for being more user friendly and preventing to waste their time. It is believed that this improvement will return to Amazon.com as being a step forward against its rivals and more revenue generating.

Total word count excluding Cover Page, Question and References: 3336

KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

References
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KCB ID: 14508, UoW ID: 1092227299339 TOLGA KOYMEN

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