Zappos Case Study Questions: Information Technology

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We want you to practice a business summary style – writing in a clear, structured manner, but not in paragraph form. If you feel you must write in a paragraph, then address the question at hand in bullets or tables (as appropriate) and then summarize your points in an executive summary-type paragraph. In general, you are attempting to efficiently and effectively make your arguments for a particular solution, describe the associated implementation tasks (“to dos”), identify the benefits and costs of the undertaking, and then drive your point home with additional considerations (risk management).

Reading materials and fill out "homework" attachment.

The thing I need to repeat is that do not use whole sentences to answer, use bullet point instead.

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Case Study Case Description: If you like shoes and shop online, you probably have heard of Zappos.com. Nick Swinmurn was inspired to found the firm after a frustrating shopping excursion in San Francisco where he failed to find a properly fitting pair of shoes in the right size, style and color. Swinmurn translated his unpleasant shopping experience into new business expressly designed to meet the demanding needs of serious shoppers. As a result of his entrepreneurial zeal and his shrewd exploitation of the tools of e-commerce, Zappos grew from its start in 1999 to over $1 billion in gross annual sales by 2008, and was such a success that Amazon.com decided to acquire the firm for $ 1.2 billion in 2009. In 1999, the U.S. shoes industry was estimated to be a $40 billion market. As of that date the shoes industry was heavily dependent on direct retail channels such as established chain stores. It is also noteworthy that approximately 1 in 3 retail sales were lost due to out of stock issues, including: inventory limitations, constrains on the number of brands sold in a given location, the number of sizes and styles carried in each store, and so forth. Like its now parent company Amazon had done with books, Zappos overcame these limitations through the stocking of a vast inventory of all makes, styles, colors, and sizes, displayed and sold through their e-commerce platform. From Idea to Business Venture In 1999, there was no web site that had a large enough scope of shoes online. To his surprise, Swinmurn found that there was no major online retailer who focused primarily on selling shoes. Knowing little about shoe retailing, he decided to test the idea of an online shoe retailing web site by approaching brick and mortar shoe retailers close to his home and he asked for permission to photograph their shoes. He posted his pictures to a modest eCommerce Web site. To fulfill orders that were placed through his Web site, Swinmurn would physically go to the store that carried the product buy the pair of shoes and ship it to the customer. This prototype of an eCommerce shoe business provided Swinmurn with the proof of concept he needed to build a real online business. Soon, he signed a collaborative relationship with three major shoe distributors, whereby they would drop ship shoes to customers who ordered them off Swinmurn’s Web site. Zappos.com grew out of this initial set of activities – a new eCommerce giant was born. As Zappos rapidly grew, order fulfillment became a challenge. The firm could not always guarantee the timeliness of supplier drop shipments to individual customers. To meet the expectations of its online retail clientele, Zappos began to open its own warehouse and fulfillment centers, employing approximately 1,600 workers. By 2004, these centers carried in excess of 3 million shoes, handbags, and other clothing items and accessories, drawing on over 1,100 different brands. As a result, Zappos.com offered the best selection of shoes available anywhere online. Zappos eCommerce site exploded with growing popularity. By prepared for MISM 2301 by A. Dedeke and rmk, rev’d md Page 1 Case Study 2010, the website served millions of users/visitors daily and processes between 60-65.000 purchases every day. Customer Service While the original idea behind Zappos was to create a web site that offered a huge selection of shoes, the founder also believed that to compete in the eCommerce marketplace, the firm must provide the “best service” as well as a vast product mix. Therefore, like Amazon, Zappos’ fulfillment focused on fast and accurate order processing and speedy delivery to the customer. The firm offered free deliveries and returns as well as a guaranteed 4-day delivery window and a 365-day return guarantee. Furthermore, Zappos allowed its fulfillment center personnel broad latitude in addressing customer needs and complaints. The focus was on customer satisfaction and hence there were no call center scripts, time limits on calls, or predefined responses to customer issues. Every employee was given fourweeks of training in the company's business strategy, culture, and customers focus. New employees were paid their full salary during this training period. Use of web-based Information Technology Zappos embraced Twitter as a valuable tool for building company culture. From its beginning, everyone in the entire organization was expected to use Twitter for communications within the company. When the CEO saw that it helped people connect at a more personal level, he began to encourage everyone to use Twitter to create a more collaborative corporate culture. However, Zappos also realized social media’s value in building an interactive customer community – deemed “Zapponians.” Customers could send a tweet to Zappos from most of the web pages on firm’s Web site and Zappos directly interfaces with Twitter servers in order to monitor and track Tony Hsieh, chief Zappos-related conversations (including setting up a separate website executive of Zappos. Photograph: Zappos called “Zappos Conversations”). The employees also used blogs to interact Twitter account with customers. Of course, not all interactions were positive, but the overall result includes 1,200 social media “conversations” with customers per month, 600 positive monthly fan tweets, and over 2.6 million Twitter followers. As its business grew, the firm opened more web sites, including Couture.zappos.com, Outdoor.zappos.com, Rideshop.zappos.com, Running.zappos.com, Blogs.zappos.com, and Deliveringhappiness.com. [Note: Students should visit at least one Zappos Web site and assess its quality in terms of content, layout, and functionality.] Having gained considerable expertise in the use of social technologies, Zappos implemented the “Ask Zappos” initiative. Ask Zappos was another means through which prospects and prepared for MISM 2301 by A. Dedeke and rmk, rev’d md Page 2 Case Study customers (through their mobile phones) could interact with Zappos employees. If you saw someone walking by with a pair of shoes you like you could take a picture and send it to Zappos for stylist advice on a comparable Zappos product. Ask Zappos required an IT architecture that enabled photos to be sent via text, email, and even via Instagram. Keeping up with demand proved challenging though – a direct appeal for response patience was posted on corporate websites. Worker Retention In most retailing companies, employee turnover was generally high. Zappos had a unique way of dealing with the problem. New employees went through an intensive four-week training program, immersing them in the company's culture, strategy, and processes. After a week or so into this training program, the firm proposed what was known at Zappos as "The Offer" to its new employees. The firm offered to pay its newest employees money if they chose to quit at that point in their tenure with the firm. The Offer, which applies to all new Zappos employees, not just front-line service people, started at $100, went to $500, then $1,000, and now stands at one-month’s salary. Zappos actually offered an incentive for its employees to quit! But of course the objective here was to ensure that only those committed to the success of Zappos stayed with the firm. Culture Zappos’ employees live by a set of core values. First among these was that the employees were encouraged to create a fun atmosphere at work. For example, the staff could dress in funny costumes. They could bring their pets to work and organize entertaining events during office hours. All these activities were intended to maintain a creative and open atmosphere in the work place, and a sense of “coolness.” For his part, Swinmurn was very much part of this fun culture, communicating with the company via blogs and Twitter. Overall Zappos’ corporate culture celebrated and embraced diversity and each worker’s individuality. Even with all the fun, the firm achieved considerable business success. Sources: • • • • Twitter account: https://twitter.com/tonyhsieh Corporate websites: http://askzappos.apps.zappos.com/faq Taylor, B., “Why Amazon Is Copying Zappos and Paying Employees to Quit,” Harvard Business Review, April, 2014. http://apmblog.compuware.com/2010/03/01/best-practices-from-zappos-to-deliver-wow-performance/ prepared for MISM 2301 by A. Dedeke and rmk, rev’d md Page 3 Case Study Case Questions: 1. Describe three critical success factors for Zappos profitability going forward? 2. List and describe the application software (front end) supporting the respective business processes at Zappos and the IT infrastructure (back end) enabling the application software. [Hint: if needed, see the IT checklist for what components are classified as infrastructure] 3. Describe the role the Zappos’ eCommerce web site plays in supporting the company’s customer intimacy and operational excellence business objectives. Your answer should address the website’s design (layout, functionality, and content). 4. Assess and describe Zappos’ level of social technology maturity. Your answer should consider people, process, and technology evidence. prepared for MISM 2301 by A. Dedeke and rmk, rev’d md Page 4 Zappos Case Questions: 1. Identify and explain three critical success factors for Zappos profitability going forward? Three Critical Success Factors Explanations • • • . . . • • • . . . • • • . . . 2. List and describe the application software (front end) supporting the respective business processes at Zappos and the IT infrastructure (back end) enabling the application software. [Hint: if needed, see the IT checklist for what components are classified as infrastructure] Application Software Description IT Infrastructure Description Add more lines as needed 3. Describe the role the Zappos’ eCommerce web site plays in supporting the company’s customer intimacy and operational excellence business objectives. Your answer should address the website’s construction (content, design, and functionality). a. Content: i. . ii. . iii. . iv. Add more lines as needed. b. Design: i. . ii. . iii. . iv. Add more lines as needed. c. Functionality: i. . ii. . iii. . iv. Add more lines as needed. 4. Assess and describe Zappos’ level of social technology maturity. Your answer should consider people, process, and technology evidence. a. People: i. . ii. . iii. . iv. Add more lines as needed. b. Process: i. . ii. . iii. . iv. Add more lines as needed. c. Technology: i. . ii. . iii. . iv. Add more lines as needed. 1 SOCIAL TECHNOLOGIES OVERVIEW 2 Why do you need to invest in social technologies? 4 Source: McKinsey Global Institute (2012) "The social economy: unlocking value and productivity through social technologies." 6 Consumer vs. Enterprise Use of social tech Activity Consumer Enterprise Identity User profile Corporate directory Secure Space Trusted, affinity groups Intellectual property protection Following Mutual Agreement; Twitterlike subscriptions Organization chart, teams, and communities Collaborative content messages, event schedules, photos, links, etc. also includes wikis, blogs, discussions, and documents Content Organization Tagging images / photos Tagging intellectual property Ambient Awareness Social presence for chat Availability for problem solving Application Integration Embedded Games, Multiplatform Sign on Content sync, events tracking Value of Social Graph Finding old friend, advertising, strength of weak ties Relationship leverage, stakeholder analysis, problem solving Value of Search Finding people or brands, filtering activity stream Search provides a key navigational role, profile search augments expertise and solution search Source: Guy Creese, Gartner Group 7 Firms gain the most from social technologies: Customers: • Need to maintain strong reputation and build consumer trust • Heavy reliance on brand recognition and consumer perception Products: • Experiential (hotels) or inspiration (personal improvement) product/service offering (beyond just buying a discrete product) • Digital distribution method for products or services Operations: • High percentage of knowledge workers • High reliance on intellectual property / lessons learned in service offerings Source: McKinsey Global Institute (2012) "The social economy: unlocking value and productivity through social technologies." Source: McKinsey Global Institute (2012) "The social economy: unlocking value and productivity through social technologies." What can you do to maximize the value of social technologies? Social analytics is the practice of measuring and analyzing human interactions across social platforms to inform decisions (e.g., social graphs) Social graphs capture and display (visualize) social interactions Assessing Social Technology maturity Source: Sean Corcoran (2011, Forrester Research) Adoption framework source: Diffusion of Innovations, by Everett Rogers (1995) Assessing Social Technology maturity Stage Description Dormant Not currently making use of social technologies. Tend to be risk averse in highly regulated industry or with few customers and competitors. Testing Social technology use growing organically in pockets (decentralized). Experimentation occurs to determine value of social technologies to the company. Coordinating Management recognizes the risks and rewards of social media and begins to put the resources and governance in place to create consistency across the organization for a more centralized approach. Scaling & optimizing Key stakeholders (e.g., social steering committee) are focusing on optimizing their social media budget, policies and activities – from improved processes to more advanced metrics to integration with other business activities. Empowering At this stage, all relevant employees have been trained and empowered to use social technologies to address customer concerns. Only a few companies have even just entered this stage but we expect many more to follow. Source: Sean Corcoran (2011, Forrester Research) Social Technology maturity - “Empowering the organization” “A business that leverages social technologies to enable better connections and relationships between empowered customers and employees – ultimately leading to better products, more efficient workflow, more loyal customers, lower costs, and greater revenue.” HERO: “highly empowered and resourceful operatives” Source: Sean Corcoran (2011, Forrester Research) Social technologies – considerations? • Do you have a culture of transparency or secrecy? • Is social technology additive or disruptive for your enterprise (internal/external)? • Will governance be central, decentral, or federal? • How do you address hacking and hijacking? (risk management) What about crowdsourcing? What about crowdsourcing? Short definition: “the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in an open call.” (Howe 2006) Jeff Howe, School of Journalism What about crowdsourcing? Long definition: a type of participative online activity in which an individual, an institution, a non-profit organization, or company proposes to a group of individuals of varying knowledge, heterogeneity, and number, via a flexible open call, the voluntary undertaking of a task. The undertaking of the task, of variable complexity and modularity, and in which the crowd should participate bringing their work, money, knowledge, or experience, always entails mutual benefit. (Estelles & Gonzalez, 2012) 17 Crowdsourcing types by “Great for” types Source: 18 Crowdsourcing types by problem types Models - Problems solved by crowds Knowledge discovery and management Source: Brabham 2013 Distributed humanintelligence tasking Broadcast search Peer-vetted creative production 19 Crowdsourcing types by problem types Knowledge discovery and management: This approach is best for information-gathering (e.g., surveys) and cataloguing problems through an online community to a central source - such as the reporting of earth tremors, potholes, or conditions of hiking trails. Distributed human-intelligence tasking: This approach is most useful when human intelligence is more effective than computer analysis. It involves distributing "micro-tasks" that require human intelligence to solve, such as transcribing handwritten historical documents into electronic files. For example, when the handwritten 1940 census records were publicly released in 2012, the National Archives catalyzed the electronic tagging of more than 130 million records so they could be searchable online. More than 150,000 people volunteered. Broadcast search: This approach is most useful when a company is attempting to find creative solutions to problems. It involves broadcasting a problem-solving challenge widely and offering an award for the best solution(s). NASA, for example, offered a prize for an algorithm to predict solar flares. Peer-vetted creative production: This approach is most useful when an organization is looking for innovative ideas that must meet a test of taste or market support. It involves an online community that both proposes possible solutions and is empowered to collectively choose among them. For example, Threadless is a company that runs weekly t-shirt design competitions where a close-knit community of online designers and consumers vote on top designs (financial compensation going to the weekly design winners). Source: Brabham 2013 20 The Wisdom of Crowds Requirement Description Diversity of opinion Each person should have private information even if it's just an eccentric interpretation of the known facts. Independence People's opinions aren't determined by the opinions of those around them. Decentralization People are able to specialize and draw on local knowledge. Aggregation Some mechanism exists for turning private judgments into a collective decision. (Surowiecki 2004)
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Explanation & Answer

Attached.

Zappos Case Questions:
1. Identify and explain three critical success factors for Zappos profitability going forward?

Three Critical Success Factors
Quality products and services that meet the
customer's demand.

Explanations






Zappos has a consistent marketing strategy.






The company makes a volume of sales.




Zappos .com provides a wide range
of shoes to its customers by
considering the different shoe sizes,
style, and even color.
Customers can openly narrate their
shopping experience with the
Zappos. It has been a great moment
for every customer.
The company is highly dependent on
direct retail sales from its chain
stores located strategically in
different centers to provide
convenient direct sales to the
customers.
The business has taken into
consideration all the aspects of its
customers.
The company has mastered the tools
of e-commerce to market its
products and record high volume of
sales.
Zappos has overcome multiple
business constraints by stocking a
variety of inventories that are
appealing to the business. The
catalogs are then displayed through
the e-commerce for customers to
view the platform.
Zappos has grown to make huge
sales since it was started in 1999
making over $1 billion annuall...


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I was struggling with this subject, and this helped me a ton!

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