INTRODUCTION TO AMAZON

Amazon.com, Inc. was incorporated on May 28, 1996 that is an ecommerce company. The Company sells a range of products and services
through its various owned and affiliated Websites. The Companys
products,

offered

through

consumer-facing

Websites,

includes

merchandise and content that the Company purchase for resale from
vendors and those offered by third-party sellers. The Company also
manufactures and sells electronic devices. The Company offers services,
such

as

Amazon

Web

Service

(AWS),

publishing,

digital

content

subscriptions, advertising, and co-branded credit cards.

The Company focuses on selection, price and convenience, through the

lowest prices possible on everyday product pricing and shipping offers,
including membership in Amazon Prime. The Company designs its
Websites to enable millions of products to be sold by the Company and by
third parties across various product categories, allowing access to its
Websites directly and through its mobile Websites, Kindle devices and
apps. The Company has many affiliated Websites, which offers programs
that enable sellers to sell their products on its websites and their own
branded websites and to fulfill orders through them. T

he Company also offers programs that allow

authors,

musicians,

filmmakers, app developers, and others to publish and sell content. The
North America segment of the Company focuses on retail sales earned
through North America-focused Websites. The International segment
focuses on the Companys operations done through its international
Websites.

Vision

To be earth's most customer centric company; to build a place where

people can come to find and discover anything they might want to buy
online.

STRATEGIES

Convenience and ease of use

Large selection: publisher relations, wholesale relations, unlimited

virtual shelf space

High Performance Service

Website is fast, reliable, and easy to use

Shipping is prompt
Customer is kept informed
Innovative technology

Brand share of mind/Networking

Short, clever name/URL/tag line

Referral program
Co-branding, cross promotion and high advertising

Community

Posting customer reviews with author reviews

 Customer gifts: bookmarks, notepads, cups, etc

Promotion where customers collaborate with famous authors

Personalization/Large customer database

Extensive customer profiles

Recommendations
Other readers who bought this title also bought
Other readers who bought this author also bought

Trust

Guarantees
Return policy
Great customer service: superior service reps, easy search, no
hassle return, email confirmation

Extended Service

Extensive subject index

Search
Ability to order before publication

 Out of print search

Cost Structure

Low price
Low overhead: less employee, less real estate, low inventory

Logistics

Fast, reliable, inexpensive shipping

Originally no inventory, use Ingram

VALUE CHAIN ANALYSIS

INBOUND LOGISTICS

Amazon has the advantage of avoiding the overhead and carrying large
amounts of inventory because it orders the books from the distributors.
They provide money and contracts to prospective authors and decide how
many copies of a book to print. Typically a first run printing for a book
varies from 5, 000 to 50, 000 copies. However, best-selling authors first
run printings are generally set at around 300, 000 copies.
Amazon.com

receives

products

from

its

distributors,

partners,

manufacturers, and publishers. Receiving is typically at the pallet or case

level. In some cases, Amazon.com receives mixed cases that include many
SKUs. Product is received and routed for putaway to a location type based
on its SKU activity profile. Items are received and routed directly to prime
storage locations or sent to reserve storage. Item types are also taken into
account at receiving.

OPERATIONS

Amazon.com sells a lot more than books and has sites serving seven
countries, with 21 fulfillment centers around the globe totaling more than
9 million square feet of warehouse space.
Amazon.com sells lots and lots of stuff. The direct Amazon-to-buyer sales
approach is really no different from what happens at most other large,
online retailers except for its range of products. we can find beauty
supplies, clothing, jewelry, gourmet food, sporting goods, pet supplies,
books, CDs, DVDs, computers, furniture, toys, garden supplies, bedding
and almost anything else you might want to buy. What makes Amazon a
giant is in the details. Besides its tremendous product range, Amazon
makes every possible attempt to customize the buyer experience.

The other main feature that puts Amazon.com on another level is the
multi-leveled e-commerce strategy it employs. Amazon.com lets almost

anyone sell almost anything using its platform. You can find straight sales
of merchandise sold directly by Amazon, like the books it sold back in the
mid-'90s out of Jeff Bezos' garage -- only now they're shipped from a very
big warehouse. Since 2000, you can also find goods listed by third-party
sellers -- individuals, small companies and retailers like Target and Toys 'R
Us. You can find used goods, refurbished goods and auctions. You could
say that Amazon is simply the ultimate hub for selling merchandise on the
Web, except that the company has recently added a more extroverted
angle to its strategy

OUTBOUND LOGISTICS

Amazon.com's DC outbound processes support the fulfillment of customer

orders placed through Amazon.com or affiliate websites. Picking, sorting,
packing, and shipping constitute the outbound processes of customer
fulfillment in Amazon.com distribution center operations.
In Amazon.com operations, pickers select products from forward pick
locations

(prime

locations)

to

start

the

order

fulfillment

process.

Depending on the item and the volume requested, an item may be picked
from library shelving, case flow racks, or pallet racks. Frazelle (2002) notes
that picking accounts for 50% of operating costs in typical warehousing
environments.

Amazon.com uses both full-path picking and zone picking to determine the
scope of picker travel. Full-path picking is when a picker can travel to all
locations within the pick area to pick items for orders. Zone picking
confines the potential travel to a subset of locations within the picking
area

known

as

zones

(Bragg,

2003).

Zone

picking

can

increase

productivity through simultaneous multi-user picking, picker familiarity

with locations, and increased pick density.

Amazon.com utilizes the capabilities of its supply chain partners to deliver

orders directly to customers. These shipments bypass the Amazon.com
internal distribution center network. An example of this arrangement is an
order for an item that Amazon.com does not have in stock in its
distribution centers, but that Ingram Book Distributors does have in stock.
Amazon.com will route this order request to Ingram, which will pick the
order, pack it in an Amazon.com box, and ship it to the customer (Maltz et
al., 2004). This process is seamless to the customer. Although
Ingram is provided as an example, other book distributors, CD distributors,
wholesalers, publishers, and manufacturers support Amazon.com through
drop shipments to customers. The third-party sellers that offer their
products for sale on Amazon.com can also be considered drop shippers.

The distribution process is initiated by a customer ordering from the

Amazon.com website or an affiliate website. Amazon.com's IT systems
determine which Amazon.com distribution center to ship the item from or
whether to ship the item from a drop shipper. The order sourcing decision
is determined by product availability and the desire to minimize
transportation costs in fulfillment costs. Drop shippers package items in
Amazon.com packaging and deliver it directly to customers. Amazon.com
distribution centers can ship items directly to customers or through
transportation hubs. Orders are delivered to transportation hubs by
Amazon.com contracted LTL or TL carriers. Upon arrival in the hub,
packages are sorted and routed to small parcel carriers such as UPS or the
US Postal Service for "last-mile" delivery.

MARKETING AND SALES

Customer tracking is an Amazon stronghold. If you let the Web site stick
a cookie on your hard drive, you'll find yourself on the receiving end of all
sorts of useful features that make your shopping experience pretty cool,
like recommendations based on past purchases and lists of reviews and
guides written by users who purchased the products you're looking at.

Amazon serves consumers through the retail websites, and focus on

selection, price, and convenience. Amazon design websites to enable
millions of unique products to be sold by it and by third parties across
dozens of product categories. Amazon also manufactures and sells the
Kindle e-reader. Amazon strive to offer customers the lowest prices
possible through low everyday product pricing and free shipping offers,
including through membership in Amazon Prime, and to improve operating
efficiencies so that Amazon can continue to lower prices for customers.
Amazon also provide easy-to-use functionality, fast and reliable fulfillment,
and timely customer service.

Amazon fulfill customer orders in a number of ways, including through the

U.S. and international fulfillment centers and warehouses that they
operate, through co-sourced and outsourced arrangements in certain
countries, and through digital delivery. Amazon operates customer service
centers globally, which are supplemented by co-sourced arrangements.

Amazon direct customers to websites primarily through a number of

targeted online marketing channels, such as their Associates program,
sponsored search, portal advertising, email marketing campaigns, and
other initiatives. Their marketing expenses are largely variable, based on
growth in sales and changes in rates. To the extent there is increased or

decreased competition for these traffic sources, or to the extent their mix
of these channels shifts, Amazon would expect to see a corresponding
change in our marketing expense.

SERVICES

Amazon focus has been on offering their customers compelling value.

Amazon realized that the Web was, and still is, the World Wide Wait.
Therefore, Amazon set out to offer customers something they simply could
not get any other way, and began serving them with books. Amazon
brought them much more selection than was possible in a physical store
(Amazons store would now occupy 6 football fields), and presented it in a
useful, easy to- search, and easy-to-browse format in a store open 365
days a year, 24 hours a day. Amazon maintained a dogged focus on
improving the shopping experience, and in 1997 substantially enhanced
Amazons store. Amazon now offer customers gift certificates, 1-Click SM
shopping, and vastly more reviews, content, browsing options, and
recommendation features. Amazon dramatically lowered prices, further
increasing customer value. Word of mouth remains the most powerful
customer acquisition tool they have, and they are grateful for the trust
customers have placed in them. Repeat purchases and word of mouth
have combined to make Amazon.com the market leader in online
bookselling.

PROCUREMENT

Amazon.com replenishes its distribution center inventory through a variety

of suppliers. Suppliers for their media product segment are large book
distributors such as Ingram Book Distributors, Baker and Taylor, as well as
other smaller book distributors. CD and DVD distributors also are utilized

as

well

as

other

wholesaler

partners.

Publishers,

CD,

and

DVD

manufacturers are also parties that replenish products to Amazon.com

distribution centers. To give some perspective regarding the structure of
the industry, data from Amazon.com's early stages in 1996-1997 indicate
that Amazon.com procured the 200,000 to 400,000 best selling books
from wholesalers, and up to 1.5 million additional book titles from 20,000
different publishers

TECHNOLOGY

Amazon.com utilizes technology innovation to differentiate itself on online

customer experience. Innovations such as personalized recommendations,
one-click ordering, and search inside the book are all Amazon.com
innovations. These innovations comprise the virtual store experience for
the Amazon.com customer.

While acknowledging Amazon.com's front-end innovations, Jeff Bezos

recently noted that 90% of innovation has been to support back-end
supply chain integration and execution (Kirkpatrick, 2004). Amazon.com
has highly customized software applications that support their supply
chain business model. For example, the integration of the partners in
Amazon.com's multi-tier supply chain requires advanced information
technology capabilities. For example, Amazon.com is linked into Ingram's
systems to see Ingram inventory levels when deciding whether to use
Ingram to drop ship an order to a customer (Digital4Sight, 2000). The
ability to display products on the virtual storefront, source them to
different supply chain partners, and manage the delivery of those orders
while providing customer visibility illustrates Amazon.com's supply chain
technology expertise.

HUMAN RESOURCES

Amazon.com has a great training for its employees. According to the

annual report of amazon.com 2010, the past years success is the product
of a talented, smart, hard-working group, and Amazon take great pride in
setting up of this team. Setting the bar high in Amazon approach to hiring
has been, and will continue to be, the single most important element of
Amazon.coms success.

Amazon

employed

approximately

33,700

full-time

and

part-time

employees at December 31, 2010. However, employment levels fluctuate

due to seasonal factors affecting Amazons business. Additionally, Amazon
utilizes independent contractors and temporary personnel to supplement
their workforce, particularly on a seasonal basis. Although Amazon has
works councils and statutory employee representation obligations in
certain countries, Amazons employees are not represented by a labor
union and Amazon consider their employee relations to be good.
Competition for qualified personnel in Amazons industry has historically
been intense, particularly for software engineers, computer scientists, and
other technical staff.

INFRASTRUCTURE

Amazon has a huge fraction of the effort into building the infrastructure
that lets a Web-scale business run. Amazon has all the scar tissue to show
people they know how to do it. Amazon thinks its also going to be a very
meaningful business for them one day. So Amazons motives for doing it
are very straightforward: Amazon thinks its good business.

EBAY

eBay

establishes

itself

as

the

The

worlds

Online

Marketplace

.Coincidently, it is also the positioning statement of eBay,which itself

means many things about the companys identity, it enables trade on
local, national and international basis, with a diverse and passionate
community of individuals and small businesses, Bay offers an online
platform where millions of items are traded each day.

According to company lore, the idea for eBay came from founder Pierre
Omidyars wife, who wanted to trade Pez dispensers with other collectors
over the Internet. In truth Omidyar had been pondering an Internet auction
venture before he was ever aware of Pez mania. He says that he had been
thinking about how to create an efficient marketplace-a level playing field,
where everyone had access to the same information and could compete
on the same terms as anyone else. After writing the code for the site,
Omidyar launched eBay from his home in mid-1995.the concept of an
Internet marketplace caught on so quickly that by the end of the year,
eBay was getting a few thousand hits daily.

Even more impressive the website was profitable from its inception. The
objective at ebay was to develop the work ethics and culture of eBay as a
fun, open and trusting environment and to keep the organization focused
on the big picture objectives and key priorities. Ebay went public in
September 1998 at $18 a share. By early march 1999, the stock was
trading

approximately

b$282

per

share.

The

company

market

capitalization had surpassed that of even Amazon.com, making it the

worlds most valuable Internet retailer.

STRATEGIES

1) Establishing a larger user base to attract new users, eBay established

relationships with more than 60 websites, including America online which
gave eBay the largest access to the largest user base on the internet and
prevented AOL from entering the auction arena, bay also added dealer to
person trading and addresses the fast growing and fragmented small
business market by creating a feature called business exchange, where
businesses

could

buy

or

sell

new,

used

or

refurbished

business

merchandise and professional tools in their local market.

(2) eBay concentrated on local and international trading EBay has local
sites in 53 U.S markets they deliver distinct regional flavors and give users
the convenience of shopping locally for difficult to ship items such as
automobiles or antique furniture. The company also built a truly global
presence with users in more than 150 nations.

(3) Creating a strong brand for eBays first few years it did not spend a
single penny on marketing, relying instead on viral marketing and its
ability to piggyback on competitors ceaseless (and expensive) efforts to
retain market recognition. The companys brand building shifted though

with the arrival of new top professionals.

(4) Broadening the trading platform by 1999, eBays fourth year, a host of
competitors had entered the online auction market, while eBay had the
first entry advantage, not all of its competitors were small start ups, some
including yahoo and Amazon were internet significant players with
extensive, established user bases. EBays response was to extend its core
business into other attractive niches, the company introduced higher
priced product categories, a move that would increase its profit margin
dramatically

while

requiring

minimal

infrastructure

and

operating

expenditures. The only caveat was that the company needed to develop a
new skill set-to overcome this obstacle eBay made several acquisitions,
starting with auction house Butterfield and Butterfield, the marriage of
offline and online auction houses revolutionized the way that fine antiques
and collectibles were bought and sold, allowing users to place real-time
bids for items on offline auction house floors.

(5) Maintaining a strong community affinity - the company believes that

fostering direct interaction between buyers and sellers with similar
interest had enabled it to create loyal, active community of users, As
noted earlier this emphasis on community building has been present since
eBays founding.

(6) Continually enhancing site features and functionality Because eBays

strategy is to be as hands-off as possible when it comes to transactions,
the company has to provide a reliable and straight forward way for users
to manage the process on their own, buying and selling on eBay are made
easy for users to manage the process on their own. Sellers need do little
more than write a compelling description of the item up for auction,
provide a suitable photograph, and decide how many days the auction will
last. To enhance the payment component of the customer experience, an
admitted difficulty for mast buyers and sellers, bay acquired a company
called Billpoint, whose online bill payment service facilitates credit card

payment between buyers and sellers.

VALUE CHAIN ANALYSIS

Inbound Logistics

eBay operated as an online venue for buyers and sellers, sellers listed
items and provided descriptions, often including photographs, an auction
was conducted, in which potential buyers could bid on the item on sale
until a fixed time (unlike traditional auctions, which continued until no
more bids were placed), the sellers specified the conditions of the auction,
as well as the time the auction would close, bidding was often active as
the auction neared closing time, sometimes driven by automated
sniping programs that some buyers used their bid in just before the
auction closed, so these created an interesting and involving environment.

Operations

One incident, in 1997, there were forty categories of items for sale, the
posting of antiques and collectibles had increased dramatically, and
additional categories for these items were needed, eBay evaluated the
items listed and developed many new listing categories, without even
consulting the community, it doesnt have to bother about goods which
are to be manufactured or assembled and individual operations, EBay was
not bothered about the operations aspect of any goods, it only provided a
virtual roof for enabling transactions.

Outbound Logistics

eBay acted as an online auction site so they need not be worried about
goods being sent along the supply chain to wholesalers, retailers or the
final consumer.

Marketing and Sales

eBays fundamental challenge was to establish trust among remote and

anonymous traders who might never interact again, it had a feed back
system for building reputations, community members could use a number
of tools to make their transactions secure. Most purchases on eBay were
protected by an insurance policy administered by Lloyds of London as
part of the standard eBay service and protected at no charge to the buyer,
high value transactions were protected by Tradable, a third party escrow
service company. Sales outside the eBay marketplace were a concern for
eBay an enterprise, since it did not receive fees for such off-site
transactions. The company also believed such that off-site transactions
deprived the participants of eBays services in case of problems. eBay
formed groups called voices, they agreed to participate for one year

without any compensation, it established a group for community support

and relations, true customer orientated fashion, at this stage the
organization prepares the offering to meet the needs of targeted
customers. This area focuses strongly upon marketing communications
and the promotions mix.

Service

EBay community flourished, this community was analogous to a real world

society, in which people interacted with each other under a set of shared
rules and expectations, this excludes all areas of service such as
installation, after-sales service, complaints handling, training and so on.

Procurement

EBay need not be worried about procurement; (this function is responsible

for all purchasing of goods, services and materials, the aim is to secure
the lowest possible price for purchases of the highest possible quality. But,
eBay only provides a platform for online trading to take place and doesnt
take

possession

of

the

items

being

sold

this

reduce

inventory

management costs.

Technology Development

EBay operated as an online venue for buyers and sellers; technology is an

important source of competitive advantage. eBay uses online option to
innovate, to reduce costs and to protect and sustain competitive
advantage.

This

includes

Internet

marketing

activities

and

lean

manufacturing and customer Relationship Management (CRM) and many

other technological developments.

Human Resource Management (HRM)

Employees are an expensive and vital resource. An organization would

manage recruitment and selection, training and development, and rewards
and remuneration. The mission and objectives of the organization would
be driving force behind the HRM strategy. eBays strategy of developing a
community whose members are anonymous, trust among traders still
prevailed is indeed incredible.

Firm Infrastructure

This activity includes and is driven by corporate or strategic planning. It

includes

the

Management

Information

System

(MIS)

and

other

mechanisms for planning and control such as the accounting department.

But eBay has created an online marketplace, it operated much like a
newspaper-classified section, it facilitated person-to-person transactions
but did not take possession of the items being sold.

WALMART

INTRODUCTION

Wal-Mart Stores

is an American multinational retail corporation that

operates a chain of discount department stores and warehouse stores.

Headquartered in Bentonville, Arkansas, United States, the company was
founded by Sam Walton in 1962 and incorporated on October 31, 1969. It
has over 11,000 stores in 27 countries, under a total 71 banners. The
company operates under the Walmart name in the United States. It also
owns and operates the Sam's Club retail warehouses.

Walmart is the world's largest company by revenue, according to

the Fortune Global 500 list in 2014, as well as the biggest private
employer in the world with 2.2 million employees. Walmart is a familyowned business, as the company is controlled by the Walton family. Sam
Walton's heirs own over 50 percent of Walmart through their holding
company, Walton Enterprises, and through their individual holdings. It is
also one of the world's most valuable companies by market value, and is
also the largest grocery retailer in the U.S. In 2009, it generated 51
percent of its US$258 billion sales in the U.S. from its grocery business.

STRATEGIES

Business-level Strategy
Walmart uses a combination strategy of cost leadership and differentiation. They
provide a wider variety of products and services with the same or better quality at a
price that is cheaper than their competitors can provide. Walmart concentrates on
finding ways to lower their costs by constantly rethinking how to complete their
primary and support activities to reduce costs still further while maintaining
competitive levels of differentiation. Their successful supply chain management is an
important way helping them to implement the cost leadership strategy. They has
effective inbound logistics by using just-in-time inventory. And they have cut costs
from outbound logistics by creating better fuel efficiency in their trucks, getting more
pallets on a load, and decreasing empty miles driven by their trucks (Dess, 2012).
Corporate-level Strategy
The major reason behind the success of Walmart lies in the fact that the company
believes and concentrates on the strategy of single business, which means more than
95% of its revenue comes from their grocery business. Over 30 years, the strategy of
single business has been contributing greatly to the success of Walmart, they have
never believed in the concept of diversification for the sustenance of its growth and
also its advantages at the competitive level (Market entry strategies of Walmart in the
international arena, 2013).
International-level strategy
Walmart has been able to successfully enter into the global market because of the use
of multinational business strategy. This strategy involves that customers of different
countries are treated differently and hence productivity and profitability are high. It is
imperative for Walmart to cater every region's differences in product preferences;
thus, they work under the "Different Stores for Different Folks" philosophy (Walmart:
An Analysis, 2008).
Strategic Challenge

Globalization
Whether you are a local mom and pop shop or a multinational Fortune 500 company,
neither can ignore the realities of globalization and the affect it has had on company
processes, from supply chain to target consumers (Physioc, 2013). As a multinational
Fortune 500 company, Walmart is also facing the challenges by globalization. Firstly,
there is a challenge from the suppliers of Walmart. When the company expand to
other countries, they should have different suppliers, because of the different market
they targeting.
Technology

In the Information age, the development of network technology has a significant

effect on the retail industry. This effect be reflected in the following aspects:
1. Network technology break space and time barriers. Stores location is no
longer important. Traditionally, the location for retail store is critical, because
it affects customer flow and sales directly. In the information age, network
technology break through the geographical limitation, retailers nowadays can
expand their market globally. Therefore, Walmart cannot purely rely on the
location anymore, but to focus on market-based management of innovation.
2. Selling methods change. Technology changes customers behavior from store
shopping to home shopping. They can save a lot time by easily shop
online. This change lead to operational changes for retailer. Online store will
become the mainstream of global business model. Apply to Walmart situation,
it is way behind Amazon in the area of online shopping. To catch up,
Walmarts huge organization inertia will be a barrier for them to respond
quickly (Banjo, 2013).
3. Development of information technology also affects Walmarts human
resources. Technology could replace some man power, and for those
remaining employees, constant training will be needed for them to be
competent. Changes in human resources will be a challenge for Walmart,

because laying off could lead to some social issues such as unemployment,
and training would mean money and time have to be sacrificed.
4. Technology could lower Walmarts profit margin. Network has enabled people
to find all the product information online, which means searching for the best
price become relatively easy. In addition, technology could also lower the
competitors cost which include communication costs, labor force costs,
purchase costs, infrastructure cost and searching cost, so they could also
provide the products with lower price. Therefore, the price war between
retailers are fiercer, resulting in profits in retail industry be further reduced.
Apply to Walmart situation, because Walmarts core competitive advantage is
low price, it will face more challenges in the future.

VALUE CHAIN ANALYSIS

INBOUND LOGISTICS and OUTBOUND LOGISTICS

Wal-Mart uses a logistics technique called Cross Docking. In this system,

finished goods are directly picked up from the manufacturing site of
supplier, sorted out and directly supplied to the customers. This system
reduces handling & storage of finished goods, virtually eliminating role of
distribution centers & stores. Because of cross-docking the system
shifted from supply chain to demand chain which meant, instead of
retailers pushing the products into the system, the customers could pull
the products, when & where they required.
Walmart today about 60% inbound freight (closer to 80% for their grocery
segment) is managed by suppliers. The important of Walmarts logistics
infrastructure was its fast and responsive transportation system. The
distribution centers were serviced by more than 3,500 company owned
trucks.

OPERATIONS

Wal-Mart operations are comprised of three business segments:

Wal-Mart Stores, SAMS CLUB, and Wal-Mart International
Wal-Mart Stores segment is the largest segment, which accounted for
approximately 67.3% of their 2005 fiscal sales. This segment consists of
three different retail formats, all of which are located in the United States.
This includes the following sections:
Super-centers, which average approximately 187,000 square feet in size
and offer a wide variety of products and a full-line supermarket;

 Discount Stores, which average approximately 100,000 square feet in

size and offer a wide variety of products and a limited stock of food
products; and
Neighborhood Markets, which average approximately 43,000 square feet
in size and offer a full-line supermarket and a limited variety of general
merchandise.
SAMS CLUB segment consists of membership warehouse clubs in the
United States which accounted for approximately 13.0% of 2005 fiscal
sales. SAMS CLUBs in the United States average approximately 128,000
square feet in size.
Wal-Mart International operations are located in Argentina, Canada,
Germany, South Korea, Puerto Rico and the United Kingdom, the
operations of joint ventures in China and operations of majority-owned
subsidiaries in Brazil and Mexico. This segment generated approximately
19.7% of 2005 fiscal sales. Here, it operates several different formats of
retail stores and restaurants, including Super-centers, Discount Stores and
SAMS CLUBs.

MARKETING AND SALES

Wal-Mart prided itself on its everyday low price, prodide the customer
with a clean, pleasant, and friendly shopping experience.
Employees wore blue vests to identify themselves
Aisles were wide
Apparel departments were carpeted in warm colors
A store employee followed customers to their cars to pick up their
shopping carts
Customer was welcomed at the door by a people greeter, who gave
directions and struck up conversations.

In some cases, merchandise was bagged in brown paper sacks rather than
plastic bags because customers seemed to prefer them.
A simple Wal-Mart Logo in while letter on front of the store served to
identify the firm.

PROCUREMENT

Wal-Marts process of procurement involves reducing its purchasing costs

as far as possible so that it can offer best price to its customers. The
company procures goods directly from the manufacturers, bypassing all
intermediaries.
Wal-Mart has distribution centers in different geographical places in US.
Wal-Marts own warehouses supplies about 80% of the inventory. Each
distribution centre is divided in different groups depending on the quantity
of goods received. The inventory turnover rate is very high, about once
every week for most of the items. The goods to be used internally in US
arrive in pallets & imported goods arrive in re-usable boxes.
The distribution centers ensured steady flow & consistent flow of products.
Managing

the

center

is

economical

with

the

large-scale

use

of

sophisticated technology such as Bar code, hand held computer systems

(Magic Wand) and now, RFID. Every employee has access to the required
information regarding the inventory levels of all the products in the center.
They make 2 scans- one for identifying the pallet, and other to identify the
location from where the stock had to be picked up. Bar codes & RFID are
used to label different products, shelves & bins in the center. The hand
held computers guide employee to the location of the specific product.
The quantity of the product required from the center is entered in the
hand held computer, which updates the information on the main central
server. The computers also enabled the packaging department to get
accurate information such as storage, packaging & shipping, thus saving
time in unnecessary paperwork. It also enables supervisors to monitor

their employees closely in order to guide them & give directions. This
enables Wal-Mart to satisfy customer needs quickly & improve level of
efficiency of distribution center management operations.

TECHNOLOGIES

Technology is inevitable in every sphere of life today; it has always made

things easier. Wal-Mart works on the same strategy. Traditionally,
technology has been upgraded in billing systems and for storage
purposes. A new area where technology could be applied to, where many
expenses could be saved was in inventory management and logistics. WalMart being so huge, needed to keep track of men and material sent across
different countries and had to maintain hundreds of warehouses across the
world. Bar-codes have been initially identified as a suitable technology to
meet the purpose.
But due to the limitations of barcodes, a new emerging technology called
RFID has been identified to meet the demands. RFID is low cost Radio
Frequency

Identification

system

which

requires

minimum

human

intervention to carry out tasks ranging from billing to materials tracking

and supply chain management. It is a small wireless device which can
store good amount of data and can virtually be tagged to anything.
RFID is an electronic tagging technology that allows an object, place, or
person to be automatically identified at a distance without a direct line-ofsight, using an electromagnetic challenge/response exchange.

HUMAN RESOURCE MANAGEMENT

Weve learned some hard lessons in our stores, clubs and distribution

centers when we developed something and people didnt use it, and they
chose to find other ways to get the job done. We are working hard to
develop

systems

that

are

easy

to

use.

That

puts

an

awesome

responsibility on that developer to get out and understand the business.

Thats one of our key things: Were merchant first, technologists second.
We have a very clear set of critical success factors that every associate in
our division has to live by, and they are generally conditions of
employment. Some of them are complicated and some of them are very
simple: excellent customer service, testing and validation before you roll it
out, balance and controls, payback and ROI. All new [IS] associates are
indoctrinated into that set of disciplines, and all associates review it at
least on an annual basis. The disciplines are the same for everybody
regardless of what team youre on.

INFRASTRUCTURE

Wal-Mart set up its own satellite communication system in 1983. This

allowed the management to monitor each and every activity going on in a
particular store at any point of the day and analyze the course of action
taken depending on how the things went.
Wal-Mart ensures that unproductive inventory is as less as possible, by
allowing the stores to manage their own stocks, thereby reducing pack
sizes across many categories and timely price markdowns. Wal-Mart
makes full use of its IT infrastructure to make more inventories available in
case of items that customers wanted most, while reducing overall
inventory. By making use of Bar-coding & RFID technologies, different
processes like efficient picking, receiving & proper inventory control of the
products along with easy packing and counting of the inventories was
ensured.
Wal-Mart owns the Massively Parallel Processor (MPP), largest & the
most sophisticated computer system in private sector, which enables it to
easily track movement of goods & stock levels across all distribution

centers

and

stores.

For

emergency

contingency plan in place as well.

backup,

it

has

an

extensive

SONY

Introduction

Sony is a multinational conglomerate corporation and the world's largest

media conglomerate with revenue of US$72 billion (as of fiscal 2003). Its
principal business operations include Sony Corporation (Sony Electronics
in the U.S.), Sony Pictures Entertainment, Sony Computer Entertainment,
Sony BMG Music Entertainment, Sony Ericsson and Sony Financial
Holdings. Sony is also a leading manufacturer of electronics, video,
communications,

video

game

consoles

and

information

technology

products for the consumer and professional markets. These make Sony
one of the most comprehensive entertainment companies in the world.
The company's slogan is Sony. Like no other.

STRATEGIES

Visionary Leadership

Sony is a classic case to prove the strategic importance of a

visionary leader in carrying a brand to dizzying heights. Sonys
management team along with the CEO was responsible to create an
environment that nurtured experimentation and innovation. Sony
was also one of the early Asian brands to recognize the importance

of

branding,

which

was

again

supported

and

lead

by

the

management team.

Religious Zealous to Innovation

Innovation defined the brand character of Sony. Sony grew to global

prominence due to its ability to constantly create products before
other companies could conceptualise them. Sony also possesses the
ability to sense the hidden consumer demand and create an entire
product category through its innovative products. For instance,
when Walkman was introduced, there was no existing market for
portable music but it went ahead to became a very successful
innovation. Sonys innovative culture will help differentiate the
company from its competitors for a very long time.

Pioneer Advantage

Given the innovative edge, Sony emerged as the pioneer in almost

every sector that it was operating in. Being the first mover (or
inventor) in many cases, Sony has a great leeway in defining the
rules of the game. In addition, the brand image was enhanced every
time a competitor imitated Sony as it became an indirect way to
accept Sonys leadership position.

Human Capital

The greatest asset of Sony is of its human capital, especially

its engineers which make up the R&D department. Their

constant innovation is crucial for a consumer electronic firm

which specialises in audio-visual equipment and aim to
generate higher profit margin to cover the higher cost needed
for its primary and support activities.

Subsidiaries are well

established in many parts of the world which give Sony handson knowledge of the local market. Being an international
corporation, Sony also has good access to talents and brings
them into the company.

VALUE CHAIN ANALYSIS

In-bound Logistics

Sony engages in a series of complex in-bound logistics activities that the

company either possess or provided by 3rd parties. As the company
expands, Sony also begin to engage 3 rd parties such as Flextronics and
Solectron to manufacture some of its product components so that the
company will continue to possess sufficient wave length to engage in its
core businesses and core competencies. To lower its cost of production,
Sony also restructured and shut down some manufacturing facilities. In
fact, the company has shifted some of its production plants to low cost
countries such as China to take advantage on the cheaper labour cost.
The ability to manage the complex and geographically dispersed
in-bound logistics activities is certainly Sonys strength.

Operations

1. Sonys businesses span across different continents. It production

empire alone is spread from Asia to the U.S and to Europe. The
details are as follows:
2. Almost 50% of the electronics segment's total annual production
during the fiscal year 2002 took place in Japan (approximately 65%
of the annual production in Japan was destined for other regions).
3. China accounted for slightly more than 10% of total annual
production (approximately 70% of which was destined for other
regions).
4. Asia, excluding Japan and China, accounted for slightly more than
10% of total annual production (approximately 60% destined for
Japan, the US and the EU).
5. The U.S and Europe together accounted for the remaining slightly
less than 25% of total annual production (most of which was
destined for local distribution and sale).

Generally, Sony has been able to manage its businesses well and hence is
able to achieve successes with some of its products. For instance, Sony
was able to make a capture a sizable market shares in the video, PC and
television markets in just a few years after entering the markets.

On the other hand, companys music business, advertising business and

location-based entertainment business have not been doing well. In fact
they had been making losses. Although piracy is partly responsible for the
poor performance, there are also challenges that Sony somewhat cannot
find better solutions to address them. For instance, the respective
business units within the organisation are still not communicating and
cooperating (although there were some improvements) with one another
enough and this has affected inter-operative synergy and productivity.
Sonys inability to address the inter-operative related issues is a
cause of concern and therefore could possibly be the companys
weakness.

Out-bound Logistics

Sony is well connected to the distribution networks that every country

possesses. In fact, to ensure that Sonys products and services are
delivered and reached their destinations on time, Sony has invested
heavily to automate parts of the out-bound logistics function to track sales
orders, movement of products and payments. In addition, Sony also allows
its music and pictures to be distributed through the broadband networks.

In 2002, it was also reported in prominent magazines such as InfoWorld

and PC Magazine that many customers felt that Sonys products and

services were among the best in the world and their staffs were well
trained to handle the various operations and services. As such, the
possession of the capability to train employees and business
partners to manage the complex and geographically dispersed
out-bound logistics activities to enhance the various operation
protocols is surely Sonys strength.

Marketing and Sales

Sony's marketing strategy is to position itself as an innovator and a maker of high

quality products which enable it to sell its products at a premium higher than its
competitors. To achieve these goals, the companys innovations are commonly backed
by massive and zealous marketing efforts which have had helped to create several
successful sub-brands such as Trintron, Walkman and WEGA. These successes in turn
further strengthen the brand Sony.
Sony is very sensitive towards its competitors actions and reactions. To
ensure that the company solidifies its image and reputation as well as
achieves the desired sales and revenues targets, it has no qualms of
incurring exorbitant expenses. For instance, the Walkman brand (MiniDisc
format) was re-launched in 2000 at an estimated cost of US$30 million and
it was supported by massive broadcast, print and on-line advertising,
Internet and dealer events and promotions as well as Grass-roots publicrelations campaigns to target the Generation Y target market. The relaunch was a great success.

Sonys marketing shrewdness had to the No. 1 brand rating in the United
States by Harris poll (2000). Sony was also named as the world's 21 st most
valuable brand in the same year. In short, Sonys possession of a worldclass marketing acumen that has made Sony a global mega brand is
certainly a strength that is hard to imitate and valuable.

Service

Sony has established many service related activities that are designed to
enhance customer satisfaction that is the feeling that a product or
service has met the customer expectation. These activities are mostly
carried out at Sony service centres and call-in stations that are manned by
friendly and knowledgeable customer service offices. At the service
centres, exchanges of defective or broken merchandise are carried out
speedily.
In order to meet customers expectations, warranty and installations are
provided by the company. Given that Sony is able to provide and manage
the service activities well, it helps in further enhancing the Sony brand.

RESOURCE BASED VIEW

Physical Resources

Despite an already extensive domestic and international industrial infrastructure, Sony

still continues to invest heavily in infrastructures so that the company has sufficient
capacity to meet the growing needs and demands of their customers. For example,
Sony acquired U.S.-based CBS records in 1988 and Columbia Pictures in 1989. The
two companies were renamed to Sony Music Entertainment and Sony Pictures
Entertainment respectively and eventually emerged as two of the world's largest
content producers. Sony also invested substantially in the game business and entered
into the industry to take on established players like Nintendo and Sega directly. Sony
dominated the market subsequently. In 2001, Sony went into a joint venture with
Swedish telecommunications company Ericsson to form Sony Ericsson to
manufacture mobile phones as well as launched Sony Bank (an Internet-based bank
for middle-class Japanese investors).
By 2003, Sony owns 55 manufacturing plants after shutting down 15
worldwide. In addition, Sony has 12 home-grown manufacturing based
plants in Japan. It also has radio factories in places such as Shannon
(Ireland). On this note, it can be deduced that the physical resources
that

Sony

possesses

are

likely

to

generate

value-creating

competitive advantage which is the companys strength.

Technological Resources

Sony was first in many areas such as the Trinitron, the Walkman, the
Betamax, the Camcorder, the Compact Disc, the MiniDisc, the venerable
PlayStation (PS) and the robot dog Aibo. Some of these Sonys

technological creations have created new markets of their own. Sony also
patents

its

revolutionary

innovations

that

include

the

trademark

Walkman and video tape beta video format.

Technologically, Sony is more advanced in producing consumer-electronics

products than its competitors. For instance, its PS2 offers a substantial
jump in performance and versatility, with new features like Emotion
Energy and Graphics Synthesizer making possible more complex effects
such as facial expressions and clothes fluttering in the wind. Sony also set
industry standards for TV design and picture quality. In short, Sonys
strength is also about the ability to leverage on technologies well
and ahead of its competitors to create innovative and high quality
products for its customers so as to increase sales and revenues.

Human Resources Management

Sonys official website often stresses that the development and vitality of
Sony's employees drives dynamic growth for Sony. So far, Sony is able to
provide comprehensive training programmes worldwide to train its
employees to equip them with superior knowledge and skills. In addition,
the company provide curriculums that are tailored to local needs for
engineers and managers. Sony also possesses the ability to identify high
calibre managers to take over top management positions so that the
company would continue to be well managed and the innovation culture
proliferated. The past and present CEOs all possessed the necessary
psyche and managerial capabilities to infuse innovation and creativity.

Finance Resources

Sonys net sale of US$53 billion (3% above the previous year) for 2001 is
an all-time high record. However, the operating income of US$1.01 billion
earned in the same year represents a 40% deduction compared to the
previous years figures. This highlights that Sonys profit margin has
been eroded significantly. In fact, based on the companys annual
reports, Sonys net income had dropped drastically from 121.83bn in the
fiscal 1999-2000 to 16.75bn in the fiscal 2000-01. Its net income in fiscal
2001-02 was 15.31bn, a further decline compared to 2000-01 results.