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... erage's during any further weakness that might develop, and they could act as a springboard for a recovery in the months ahead. Right now, the level of uncertainty has risen, but past patterns show that periods of uncertainty have been followed by recoveries (Global Weekly, September 2001). The outlook for the consumer sector of the U.
S. economy in the wake of the attack is a key uncertainty, one that has been compounded by the already fragile state of consumer confidence. A recession might develop if a decline in consumer spending is too negative. Benefits from the Federal Reserves continuance in reducing interest rates are likely to be positive influences on the economy in the months ahead. Further terrorist attacks could very well occur. New attacks might further depress consumer confidence and spending activity.
They could also increase the degree of risk aversion in the U. S. economy undermining the effectiveness of U. S. monetary policy and eventually act as a drag on the dollar. Overall, GDP is likely to come in below previous expectations for the third and fourth quarters, but the rebound that is expected in 2002 is likely to be stronger due to the Fed's easing of interest rates (Global Weekly, September 2001).
With many economic factors indicating that the U. S. economy is heading toward a recession, there are reasons to be optimistic. The economic factors have to do with the fiscal and monetary policies under deployment by President Bush and with congressional cooperation. Under the current administrations fiscal policy, tax cuts promised on the campaign trail are being implemented. Part of the tax cut involves the creation of a new lowest tax bracket with a ten percent rate, compared with fifteen percent under the old law.
The tax cut became effective in mid 2001 and are to be phased in over time. The new bracket was made to apply retroactively to all of this calendar year. As a special economic stimulus measure, all taxpayers who qualify for a tax cut due to the new rate are to receive a one-time payment of the full 2001 year's worth as much as $ 600. Over the first four years of the new law, the personal tax cut cumulates to more than $ 287 billion, which, in a forward-looking company such as Amazon. com, could variably result in increased sales. Once the seriousness of the economic slowdown manifested itself, the Fed wasted little time and enacted a policy of adding liquidity to the economy.
In a series of moves beginning in January 2001, the Federal Open Markets Committee (FOMC) reduced short-term interest rates by 350 basis points this year. That puts the key federal funds rate at 3 percent and the discount rate even lower. The early months of next year should deliver increasingly more evidence that the economy is emerging from its growth recession and developing strength in ways that will continue its upward momentum. In response to the terrorist attack of September 11, 2001, the Fed is likely to continue to add to the degree of stimulus provided by monetary policy. One of the potential positives of the attacks and related events that took place in the last part of the third quarter, when some 25 percent or more of annual sales are made, is a boost in Internet spending.
Internet communications held up better than voice communications during the emergency. If people are afraid to congregate in large numbers publicly, such as shopping malls, they will be inclined to make their purchase online. Technology Sector Amazon. com must position itself to access technological improvements that potentially provide greater efficiency, superior quality, or products or services to compete successfully (Hodge, Anthony, & Gales, 1996). Economics plays a critical role in making technological decisions. Factors such as capital requirements and economies of scale can be deterrents implementing technological innovations requiring extensive investments.
Amazon. com must investigate new technologies to find the best methods for transforming inputs into sales. Failure to do so eventually results in inefficiencies and an inability to compete successfully. Now that the Internet is upon us and the World Wide Web has captured the interest in booksellers around the world, it's time to reflect on what this fundamental shift in the business landscape means for the Amazon.
com organization. It is time to take a comprehensive look at how Amazon. com can focus all of its information technology investments behind a single, winning strategy: make it easy for customers to do business with you (Seybold, 1998). With focus placed on this strategy, it should become easy to cut through organizational inertia and bureaucratic barriers. With this focus, Amazon. com can rationalize its information technology investments and avoid duplication of efforts.
With this objective, you can marshal your employees, your suppliers, and your distribution partners into a seamless virtual organization with a shared vision and purpose: making it easy for the Amazon. com customers. Internet merchants are still having trouble with one of the most basic retail fundamentals: turning visitors to the site into shoppers. Last year, only about 5 percent of people who looked at e-tailing sites actually bought a product (Wall Street Journal, September 24, 2001). They hold back for many reasons and Amazon.
com must study these patterns made by potential customers. At many sites it is still too hard to get from the home page to the sales confirmation window. Customers complain about flashy graphics that slow the loading of Web content, about the difficulties returning unwanted goods and about exorbitant shipping and handling charges. As a result, online retailer's conversion rates of the percentage of visitors who actually buy something online remain a fraction of what brick-and-mortar retailers enjoy.
The percentage rate of browsers who actually buy something in the books/CDs / video category as of 3 Q 2000, was approximately 7. 5 percent. As economic pressures depress the current market, e-tailers such as Amazon. com have to scramble for methods to turn browsers into buyers. Making the sales will become a challenge for the organization when choosing the right technologies to enhance the bottom line by increased sales.
As growth in the numbers of shoppers online slows, increasingly, the biggest opportunity for growth for online retailers is improving the conversion rates (Kansas, 2001). Amazon. com is attacking the problem with an array of marketing strategies and technological innovation. They are streaming their pages so they load faster, and shortening the checkout process with one-click checkout, to prevent shoppers from abandoning their shopping carts out of frustration. Amazon. com is using their technology to track shoppers so they can focus their sales pitches even more tightly.
They have successfully replaced mass-appeal television and newspaper advertisements with e-mail promotions and online advertising campaigns that target existing customers offering them deals on their past purchases. Amazon. com has personalized their sites for each individual customer, showing you different products and pitches depending on your profile. Personalization tools allow company's to dig deeper by linking tools with CRM (customer relationship management), and content-management, other IT systems.
Personalization is about providing the right information to the right person at the right time. The goal: to make more efficient use of employee, partner, or customer time; increase the value of each interaction; and boost sales. As the tools for personalization have spread into other IT systems, such as marketing management, content management, and portals, businesses looking to build personalized relationships with customers, partners, or employees have more options than ever (Information Week, 2001). The challenge facing Amazon. com, however, is to determine when it is time to use personalization tools with which IT system. There are four types of personalization tools used in portals which might be successfully deployed at Amazon.
com to enhance the customer experience with each visit and to subsequently increase sales percentages per visit. Using customization tools allows users to create their own desktop workspace within the Amazon. com portal. The potential benefit using this tool would be enhances user experience by presenting them with content designed specifically for them based on previous purchases and interests. By providing topic areas within the Amazon. com portal allows users to build profiles in sub portals used to retrieve and deliver relevant information from the Web.
This information delivered to the user defines specifics to assist the customer in making the correct purchase the first time. Therefore, expenses incurred in returning merchandise are reduced. There are rules-based personalization that allows businesses to create rules to provide tiered access to information; for example, a platinum user has more access privileges than a silver user. These tiers could used to allow customer's privileges to different levels of discounts on purchases based on previous purchases expenditures or other criteria.
There are observation engine personalization options, which recommends where to find information or help, based on traffic patterns of other users with similar profiles or surfing patterns. This personalization tool pulls stored customer data to serve up products specific to that customer. The easier each visit to the Amazon. com portal is for the customer / visitor , the more likely they will return to the site for product information and purchase. By letting its customers to personalize the type of content delivered for each visit, Amazon. com is able to lower the costs.
The portal market for information delivery is ripe for personalization tools that will create a competitive advantage. Online customers are more demanding of new features to maintain their interest and enhanced visitor experience. Basic personalization means letting the customer arrange the layout of their own screen and create an individual work environment. As mentioned earlier, customers are expecting rules-based personalization that lets Amazon. com customers access information or discounts based on their status within the Amazon organization. They are requesting observation engines that make recommendations where they can find the information they are looking for based on previous visitor experiences and profiles.
New technological innovations can result in increased sales and market share. Future plans at Amazon to leverage Adobe's relationships with publishing companies and its widely used PDF format to enhance adoption of e-books. As part of an agreement with Adobe, within the next twelve months Amazon. com should begin opening e-book sites in its online stores in globally diverse markets. By giving customers a choice in the format used to download e-books and by adding titles to the selection, Amazon. com would be poised to boost e-book sales, which are growing at a moderate rate (Informationweek.
com, September 2001). No one said making money by selling over the Internet was going to be easy. E-commerce is hard, but not impossible to show a positive cash flow. Persistence on the Web can lead to success. Amazon.
com had not shown a profit as of 2 Q 2001, but management is expecting to turn its first operating profit in the 4 Q 2001. The carnage of companies attempting to profitably sell merchandise online continues. At least 435 Internet companies - of which 47 percent were e-commerce companies - have shut down since January 2001 as reported by Web mergers. com (2001). Of the 494 Internet-related businesses that went public during the last five years, only 11 percent trade at more than their offering price and nearly one-third trade at more than 80 percent below their offering price, according to Sandeep Varna, a vice president at the New York City-based consulting firm, Stern, Stewart, & Co. (2001). Consumer e-commerce revenues hit $ 44. 5 billion dollars in 2000 - a 66 percent increase over 1999 levels - and represents 1. 7 percent increase of all U.
S. retail revenue (CIO Magazine, September 2001). Those retailers and service providers who focused on profits from the beginning have demonstrated the e-tailing has more to do with old-fashioned business sense and the ability to ship boxes around the country than which company has the snazziest website or most innovative business model. Human Resource Sector Human resource sector is the source of human inputs. Key part of the definition of an organization is that it is made up of people. Organizations must go outside their boundaries to obtain these valuable human inputs.
To a large extent nature of the organization is determines by the ability of potential workers. It's not just the mere availability of labor but, their level of training and education, local wages and benefit standards, presence or absence of labor unions and prevailing worker values or attitudes are a few examples of human resource sector variables. Organization must consider these variables in their human resources policies and their decisions on where to locate. Amazon employed approximately 9, 000 full-time and part-time employees currently and employs independent contractors and temporary personnel on a seasonal basis. None of these employees represented by a labor union. First, with the trends toward downsizing and a leaner, organizations are hiring more flexible workforce like part-timers and temporary staff.
On January 30 th of this year, Amazon announced 1300 layoffs and sources from Amazon saying the company is planning to cut 15 percent more of its workforce. Qualified and well-trained people are available through the temporary work force for Amazon. In US the temporary staffing industry, has become a $ 40 billion-a-year business. More Than 90 percent of companies use temporary workers each year to reduce the organization's overhead and reduced worker commitment. There are nearly 2. 2 million temporary workers in the United States, about 2 percent of all jobs.
That's upped from 708, 000 in 1985, according to the National Association of Temporary and Staffing Services (NATSS), a Trade group in Alexandria, VA. While office-support and clerical positions still account for 40 percent of all temp jobs, technical and professional fields are the fastest-growing segment, making up 15 percent of the temporary work force, according to NATSS. " Amazon's customer service employees in Seattle had launched a union organized campaign seeking a collective bargaining agreement. Many employee union activists cited job security concerns as the reason for seeking union representation with Wash Tech, which is a local affiliate of the communications workers of America. In making range of strategic decisions, Amazon moved towards the contractors and 'temp-to-perm' employees to meet the demand and adding more to employee work ethics. Local wages and benefits for flexible workforce has attracted all age groups, genders and high-qualified people as well. Wages and benefits are the key factor of temporary workforce; temporary agencies within the US withhold income and social security taxes for their employees and pay premiums for unemployment insurance and workers' Compensation.
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