Amazon External and Internal Factors

Running Head: EXTERNAL AND INTERNAL

External and Internal Factors

Communication Skills for the Human Services Professional

University of Phoenix

March 14, 2010

Amazon.com (Amazon) was founded by Jeff Bezos in 1994 and launched its online website in 1995. His vision of this type of online retail was conceived as he and his wife were on a trip from New York to Seattle. Amazon started its early operations in a garage, which was later converted into a workspace that also at first only housed three Sun computer units.

In the beginning, it originally started out to be an online bookstore, but rapidly expanded their products based off customer responses. The company has international websites in countries like China, Germany, France, Japan, Canada, and the United Kingdom.

Amazon is one of the foremost online retailers known in the world. The company also operates through various international websites, but maintains its primary operations in North America. The company was headquartered in Seattle and employs 20,700 people.

The realm of Amazon.com has attracted no less than 615 million online guests annually in 2008 according to a recent study. That is nearly double the searches of Wal-Mart. Amazon boasts just about 50 million viewers to its website in a single month. The company remains gainful as they are constantly making a profit of their income, based on what was reported at $35.3 million in 2003, has risen in revenue to nearly $180 million in 2009. The company revenue has increased thanks to the diversity of various types of merchandise and an international existence.

Going global is every organization dream because the results range from more customers, to more revenue. Amazon original website wasn't attractive to many visitors. Jeff Bezos had to look at ways of reaching more people and keeping them as customers. Within time he created a website that would appeal to everyone; he wanted to create more than an online bookstore. Amazon customers were no longer just from Washington State but were from all over the world.

People began viewing Amazon.com as an online community instead of just a place to purchase items. However, in 2001 Amazon reported a fiscal loss of $1.4 billion causing more than 1000 layoffs. Jeff Bezos had an idea: recruit other companies to sell their products through amazon.com as well as their own website. Many companies loved this idea and though Amazon was not directly responsible for the inventory through these companies this creates a profit for all involved.

Technology today is abundant and universal. The development of new and extraordinary technology has forever made a change to the way companies conduct their daily business. The extensive amount of technology that is readily available to users within a business is astonishing. Technology relates to the four functions of management because it allows actions within the four steps to be completed instantly. This significantly speeds up the process of accomplishing set goals. The increase in technology adds positively to the strategies that companies have to increase business; however it does not come without its challenges. As Bateman and Snell state, (2009) "using technology effectively is more than a matter of learning new skills; it also involves making judgments about where to apply technology for maximum benefit" (p. 9). Throughout performing the four functions of management, an excellent manager should take the time to ensure that technology is being used appropriately. An example of this is Amazon creating the one click ordering system. This system made it easy for returning customers to place new orders without being required to re-enter basic and payment information.

Bateman and Snell (2009) define innovation as the "introduction of new goods and services" (p. 12). When a company can offer new goods and services, they will keep their company alive and thriving. Amazon main focus is always making the shopping experience carefree and fun. Many of the most important criteria for shopping online was pioneered by Amazon.

In today's ever changing business world organization must adapt with changing times by introducing new products or services. Offering innovative items to customers creates excitement about the company and the products offered. This inspires customers to purchase items from those that have an innovative business continually. Although introducing new goods and services is an important aspect of innovation; there is another aspect that can often be forgotten. This aspect is delivery. Marketing a product in a new way allows customers to see the use of a product in a different light. New ways to deliver a product or service will increase an organization's customers. The four functions of management and innovation go hand-in-hand. The four functions of management will make this happen through planning, organizing, leading, and controlling. According to OCF Berkeley "Amazon had spent over 19% of sales on marketing in 2000 and In that same year the Amazon name was more recognizable than Burger King, Wrigley's, or Barbie, and of course more recognizable than Barnes and Noble."

Amazon always carried a minimal inventory and relied on major distributors and wholesalers, this created a huge problem during the holiday season. Amazon decided to build over four million square feet of warehouse space at a cost of $300 million and 99 % of holiday orders arrived on time around the globe. The company has many warehouses in North America, Europe, and Asia. The warehouses are located near airports because the rent is cheap. Having large warehouses with cheap rent allows the company to have