Decision Models Used in Amazon, Essay Sample for Students

A decision model refers to an intellectual template used for perceiving, managing, and organizing the logic behind a particular business decision. By combining large amounts of data and highly sophisticated algorithms, decision models help improve corporate performance by overcoming the biases that cloud judgment (Katsikopoulos, Durbach, & Stewart, 2018). Resultantly, more corporations around the world are applying decision models in their daily management. This paper seeks to look at the decision models used in Amazon. Founded in 1998, in Bellevue, Washington, Amazon has grown to become one of the most successful technology companies in the world. With operations in several countries around the world, the company deals in digital streaming, cloud computing, e-commerce, and artificial intelligence. Over the years, the company has become known for the disruption it has caused in well-established industries primarily through mass scale and technological innovation. The company also heavily relies on data/decision models to identify challenges and opportunities in the market and hence make decisions that favor its bottom-line.

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External Environment

Amazon operates in a volatile industry characterized by various opportunities and threat. The opportunities available for the company include expansion into developing markets, expansion of its brick-and-mortar business operations, as well as the formation of new partnerships, particularly in the developing markets. Penetration into developing markets would ensure that the company's presence is established ahead of its competitors. Partnerships would make this strategy successful. Expansion of the brick-and-mortar outlets would help increase its revenues (Conaway, Regester, Martin, Nixon, & Senior, 2018). The major threats facing the company include cutthroat competition from both online and non-online companies, cybercrime, as well as imitation of its products and business model. Firms such as eBay, Walmart, and Netflix are among the major competitors.

Key Sources of Power and Weakness

Amazon's key source of power is arguably its strong brand. The brand is the strongest in the global online retail market. The company enjoys a top of the mind recall not enjoyed by any other online retailer around the world. It has mostly been responsible for the company's rapid growth and the ease of entry into new markets (Nadkarni, 2017). The biggest weakness of the company is its imitable business model. Other companies can easily develop e-commerce websites selling anything. Recent years have seen the emergence of tens of retail businesses in the digital space. This creates opportunities for many other companies hence presenting greater competition to Amazon. Some of these companies, such as Hulu, Oyster, and Barnes & Noble, are proving to be significant competitors.

Decision Models

As mentioned earlier, Amazon employs decision models to make strategic decisions that have enabled it remains at the top of the e-commerce industry. The company mainly uses data to drive sales and profits. The recommendations are offered to customers based on their past purchases, virtual shopping, and reviews. Engagement metrics, including open rates, click-through rates, as well as opt-out rates also determine the recommendations. This, in turn, boosts sales and profits. Since a strong brand has been cited as the company's key strength, there is a need to maintain it especially in the face of increasing competition from both existing and emerging rivals (Bilgihan, 2016). To achieve this, I recommend the application of Keller's Brand equity Model, which focusses on the enhancement of customer experience.

Conclusion

The volatility and unpredictability of the modern business environment require that businesses make sound decisions to ensure their survival both in the present and the future. Through the use of massive data and sophisticated algorithms, decision models help in making these decisions. Amazon is among companies that have used decision models to boost their sales and profits. However, to maintain a strong brand image, Keller's Brand Equity Model should be adopted.

Annotated Bibliography

Bilgihan, A. (2016). Gen Y customer loyalty in online shopping: An integrated model of trust, user experience and branding. Computers in Human Behavior, 61, 103-113. Retrieved from https://www.sciencedirect.com/science/article/pii/S0747563216301753

This study sought to find out the importance of customer experience and brand image among Generation Y customers. The research established that Gen Y, who have growing spending power, have different responses to online shopping as compared to other generations. Trust and brand equity were fingered out as the precursors of their loyalty. This article is peer-reviewed and was published in a respected journal, Computers in Human Behavior. Its author, Dr. Anil Bilgihan, serves as an associate professor in the College of Business at the Florida Atlantic University. Therefore, he is a trusted voice in this field. The article is essential in that it shows the importance of brand image, which the recommended model seeks to build.

Katsikopoulos, K., Durbach, I. N., & Stewart, T. J. (2018). When should we use simple decision models? A synthesis of various research strands. Omega, 18, 17-25. Retrieved from https://www.sciencedirect.com/science/article/pii/S0305048317302566

This study sought to compare the performance of simple and complex decision models in an attempt to find a consensus on a question that has been asked for long. Though simplifying decision models have various benefits, its costs should never be ignored. The authors showed how the two could be reconciled. The article is peer-reviewed and is published in a respected journal. The authors are scholars holding various positions in different universities around the world and hence have authority in the field. The article helps emphasize the importance of decision models in modern businesses.

References

Bilgihan, A. (2016). Gen Y customer loyalty in online shopping: An integrated model of trust, user experience and branding. Computers in Human Behavior, 61, 103-113. Retrieved from https://www.sciencedirect.com/science/article/pii/S0747563216301753

Conaway, R. N., Regester, K., Martin, S., Nixon, C., & Senior, B. (2018). Amazon Whole Foods: When E-Commerce Met Brick-and-Mortar and Saved the Brand of Conscientious Capitalism. Journal of Marketing Development and Competitiveness, 12(3). Retrieved from https://www.articlegateway.com/index.php/JMDC/article/view/67

Katsikopoulos, K., Durbach, I. N., & Stewart, T. J. (2018). When should we use simple decision models? A synthesis of various research strands. Omega, 18, 17-25. Retrieved from https://www.sciencedirect.com/science/article/pii/S0305048317302566

Nadkarni, D. (2017). The Four: The Hidden DNA of Amazon, Apple, Facebook and Google. Anvesha, 10(3), 55-56. Retrieved from http://search.proquest.com/openview/2211447876a3a6873c96cf6fa52c406c/1?pq-origsite=gscholar&cbl=1216357