There are many different ways to analyze a company value chain, but one of the most used is a value chain analysis. Let us take Amazon, for example – the Amazon value chain analysis is the process that Amazon uses to evaluate or assess the particular procedure to follow in every step of their operations.
Value chain analysis helps to improve manufacturing efficiency so that the company may give the most value for the least amount of money. To figure out how much benefit a company like Amazon is making, you should understand the value chain analysis of Amazon. Below, we will explore the value chain process, why it is crucial to know, and how you can use it to grow your business.
Background of Amazon
As a multinational technology company in the United States, Amazon.com, Inc. is very good at everything, from e-commerce to cloud computing to digital streaming. It has been called one of the most important cultural and economic global forces. It is also amongst the best international brands, and it has a lot of power. It is no surprise that Amazon is one of the Big Five tech companies in the US.
The other four companies include Alphabet, Meta, Apple, and Microsoft. Jeff Bezos, the founder, started Amazon as a place to buy and sell books online. It has since expanded into many different types of products, which has earned it this title: The Everything Store. It has several businesses, like Amazon Web Services, Zoox (autonomous cars), satellite Internet, Amazon Lab126, etc.
Amazon Primary Activities
Important: The core activities in the Amazon value chain form the foundation of its business model.
When we look at the Amazon value chain analysis, we see several tasks involved, but the most crucial is obtaining raw materials, manufacturing them, and delivering them to customers. Sales, marketing, and customer service are also possible components. Any service that Amazon offers its customers is a primary activity. Amazon's power entails five primary activities. They are as follows:
Inbound Logistics is all about getting raw materials. Since Amazon does not manufacture its products, it provides inbound logistics services to vendors. It dominates the industry because of its efficient shipping and returns. Amazon also guarantees services and is in charge of customer service, inbound logistics, and refunds.
In general, Operations in value chain analysis involve processing raw materials. Despite that, Amazon is a unique system with several activities, segments, and demography that includes the international segment, the North American segment, and the (AWS) – Amazon Web Services. The AWS consists of storage, computing, and other categories, all of which give the value chain analysis of amazon an advantage over the competition when it comes to operations and services.
Outbound logistics includes the supply, storage, and distribution of final goods. Amazon boasts 175 global fulfillment centers that serve as the backbone of its outbound operations. Robotic technology supports Amazon's inventory fulfillment. Amazon's outbound logistics comprises many processes. Fulfillment Centers by Amazon are in charge of managing, storing, and shipping all orders. For efficient outbound logistics, Amazon uses its shipping providers and logistic infrastructure that entails ships, planes, trucks, and drones. Outbound logistics also includes digital product distribution. It consists of digital books and media.
Marketing and Sales
Amazon succeeds partly because of its aggressive advertising campaigns. As a renowned organization with global recognition, Amazon uses print and broadcast media advertising and focused customer marketing. Amazon offers different marketing channels than direct and conventional advertising. Amazon promotes low prices, delivery speed, and Amazon Prime services.
Amazon's value chain analysis reveals that its services are critical to gaining a competitive advantage. It offers premium services to customers and vendors, resulting in a smooth and stable business relationship. Amazon ensures comprehensive vendor support, including issuing training and facilities. Moreover, customers can benefit from Amazon Prime services and the marketplace. Amazon provides an excellent after-sale service.
Amazon Support Activities
Important: The primary operations of the value chain receive a massive boost from the support activities.
Amazon value chain analysis also includes what is known as support activities. As the name implies, support activities are tasks that assist primary activities. Support activities are four. Each activity has many unique subdivisions that match the sector in which Amazon operates. These support activities include:
The corporate infrastructure comprises quality and strategic management, financing, accounting, planning, and handling of legal matters. Amazon.com Inc. may maximize the value of the entire value chain with effective infrastructure management. Amazon.com Inc can exert control over infrastructure activities (also known as overhead costs) to improve its market position.
Human Resources Management
Amazon.com Inc can assess human resource management by evaluating recruitment, selection, training, reward, performance management, and other HR operations. Amazon.com Inc. can lessen competitive pressure by effectively managing employees' motivation, dedication, and capabilities. The organization can also reduce costs by comparing hiring and training prices. Amazon's reliance on human talent will boost the importance of support activities in value chain support.
Nowadays, most value chain activities rely on modern technology. Amazon.com Inc. must recognize the relevance of technology advancement in production, delivery, advertising, and human resource operations. Technology can boost product development and automate processes and activities. Consider automation software, technology-based customer service, product research, and data analytics. Amazon's R&D department falls under this category.
Procurement entails obtaining inputs such as raw materials and other items required to manufacture a product. The inbound, operational, and outbound value chains are interconnected; thus, Amazon.com Inc. should carefully examine procurement activities.
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