Description

Management Information Systems Cases
tion to manage the online presence of these large retailers. However, it also uses its distribution system
However, in this case, the Amazon portion consists of little more than an advertising link to the Expedia services

Introduction to Case Studies

Overview

This appendix presents several case studies that illustrate various problems that arise in

MIS. They are based on publically available information regarding different organizations.

It might be nice to have additional inside information, but this level of detail is rarely

available to students (and teachers). Instead, most of these cases look at larger problems

over time—which provides useful insight into causes and attempts at solutions. This com-

panties and organizations are presented because they have interesting issues, and available

information, not because they are leaders or laggards. Each case should be treated independently. Every organization has its own outlook, goals, and internal issues. However, it is

useful to examine what happens at multiple organizations to understand that the underly-

ing problems can affect any company or organization.

Each case has a set of initial questions at the end. These should be taken as a start-

ing point. The primary objective is always the last question: Create a report to management

that defines a plan for moving forward. One useful way to approach this report is to (1)

Identify the primary problems and causes of those problems, (2) Define a clear plan for the

next steps to be taken, and (3) Explain how the plan solves the problems and provides additional benefits.

When you are searching for causes of problems, it can be helpful to classify the level

of the problem: operations, tactics, or strategies. Although many problems will affect all

three areas, the fundamental causes often focus at one level. You should also look at more

research. Certainly, read the detail provided by the references, but also check to see if new

information is available, and check out existing Web sites. However, you should never try to

contact workers at the organizations. They are busy with their jobs.

Remember that business problems rarely have a single correct answer. There is al-

ways of room for creativity and innovation. Just make sure that your solution will actually

solve the main problems. Also, think about the implications of any solutions. Will it cause

more problems than it solves?

Virtually any MIS case could be solved with the simple statement that the firm

needs more computers. However, a one-line statement is not a very useful plan. In any

the business setting, you not only have to find an answer, but you must also persuade others (exec-

utives) that your answer is the best alternative. Additionally, a good solution will contain

an implementation plan—perhaps with a timetable that delineates each step of the process.

2

Amazon.com

In 1994, with a handful of programmers and a few thousand dollars in workstations and

servers, Jeff Bezos set out to change the retail world when he created Amazon.com (ticker:

AMZN). Shel Kaphan, Amazon’s first programmer, assisted by others, including Paul Barton-Davis, 

used a collection of tools to create Web pages based on a database of 1 million

book titles compiled from the Library of Congress and Books in Print databases. Kaphan

notes that “Amazon was dependent on commercial and free database systems, as well as

HTTP server software from commercial and free sources. Many of the programming tools

were free software” [Collett 2002]. In July 1995, Amazon opened its Web site for sales. Us-

ing heavily discounted book prices (20 to 30 percent below common retail prices); Amazon

advertised heavily and became the leading celebrity of the Internet and e-commerce.

Sales and Relationships

Amazon made its initial mark selling books, and many people still think of the company in

terms of books. However, almost from the start, the company has worked to expand into

additional areas—striving to become a global retailer of almost anything. Some of the main

events include 1995 books, 1998 music and DVD/video, 1999 auctions, electronics, toys,

zShops/MarketPlace, home improvement, software, and video games [1999 annual report].

By the end of 1999, the company had forged partnerships with several other online

stores, including Ashford.com, Audible, Della.com, drugstore.com, Gear.com, Green-

light.com, HomeGrocer.com, Kozmo.com, living.com, NextCard.com, Pets.com, and Sothe-

bys. Of course, most of those firms and Web sites later died in the dot-com crash of

2000/2001.

Amazon also established partnerships with several large retailers, including Target,

Toys ‘R’ Us, Babies ‘R’ Us, and Circuit City. Effectively, Amazon became a service organiza-

to deliver the products. The Circuit City arrangement was slightly different

from the others—customers could pick up their items directly from their local stores [Heun

August 2001]. After Circuit City went under, the relationship ended.

By mid-2003, the Web sales and fulfillment services amounted to 20 percent of Amazon’s sales. 

Bezos points out that most companies realize that only a small fraction of their

total sales (5 to 10 percent) will come from online systems, so it makes sense to have Amazon run those portions [Murphy 2003].

In 2001, Amazon took over the Web site run by its bricks-and-mortar rival Borders.

In 2000, Borders lost $18.4 million on total online sales of $27.4 million [Heun April 2001].

Also in 2001, Amazon partnered with Expedia to offer travel services directly from the Amazon site. 

[Kontzer 2001]. The deals in 2001 continued with a twist

when Amazon licensed its search technology to AOL. AOL invested $100 million in Amazon

and paid an undisclosed license fee to use the search-and-personalization service on

Shop@AOL [Heun July 2001]. In 2003, Amazon launched a subsidiary just to sell its Web-

sales and fulfillment technology to other firms. Bezos noted that Amazon spends about $200

million a year on information technology (a total of $900 million to mid-2003). The purpose

of the subsidiary is to help recover some of those costs—although Bezos believes they were

critically necessary expenditures [Murphy 2003].