Foreign Policies in the Middle East - 1750 Research Paper

Foreign Policies in the Middle East - 1750 - Research Paper Example Also after explaining the why maybe predict a future policy possibly that could be made down the road or just provide an implication from using our logic on why the other policies were created. The Middle Eastern foreign policies are among the most complex policies found anywhere in the world. Policymakers in this region have much internal autonomy in policymaking. But, Middle East is a region which has been plagued quite often with issues like instability and terrorism. This is why many opinions that this region is crowded with unstable states each of which is encountered with different challenges. This turbulence or insecurity plays a big role in shaping foreign policies. Many different labels have been given to these policies over time in research literature from strictly Islamist to Western to secular. This research paper aims to label these foreign policies as appropriately and objectively as possible with the help of modern research. It also serves to explain why foreign policies in the Middle East are so hugely affected by religion. Though there is a mix of factors which influences Middle East foreign policies, policymakers have never been able to ignore the factor o f religion which is a very powerful means of controlling or shaping the image of Middle East. A growing body of research over past many years has scrutinized the relationship between Islam and regional politics of Middle Eastern states. But, this research can surely benefit from more illuminating concepts about how religious thought works to affect outcomes of these foreign policies of different Middle Eastern states. Following discussion aims to illustrate the reality of this claim that religion strongly influences the internal relations of Middle East. It also hopes to improve understanding of this relationship between the two entities. The countries covered in this discussion are Iraq, Kuwait, Egypt, and Syria. Some suggest that bringing religion into international relations is not a modern or thoughtful strategy, but the state in the region of Middle East is different.     

Effect of Income Inequality on Economic Development

Effect of Income Inequality on Economic Development Income Inequality and Financial Crises: The 2007-2008 financial crises has been considered as amongst the worst the world has faced. This is since the great depression of the year 1930s ((Shiller, 7). This crisis was characterized by the collapse of large financial institutions, a downward fall in stock markets, bailout of banks by government, and the laying off of workers by business organizations. There are a variety of reasons given as to why the 2008 financial crisis emerged. MacEwan and Miller argue that it was an increase of income inequality that led to the emergence of the financial crisis (MacEwan and John, 5). On the other hand, others believe that it is the failure of the banking mortgage system that led to the emergence of the financial crisis (Paulet, 22). This paper examines the reasons as to why McEwan and Miller link economic instability, to income inequality. It further examines their proposal on how to solve this problem. Furthermore, this paper gives an explanation on the reasons for the emergence of the 2008 economic crises. There is a varying argument on the effects of income inequality on the growth of the economies of rich and developed countries. One of the major arguments is that income inequality was the major reason for the emergence of the 2008 global economic crisis. This is an argument that McEwan and Miller believe in (MacEwan and John, 5). Proponents argue that there are three major ways in which income inequality has the capability of destroying the economic system of a state. The first argument is that due to income inequality, there is a sharp increase in the debt ratio to income ratio amongst middle and low income households. This ratio increases because of their bid to maintain their consumption level, while they fall behind in relation to income or revenue that they are able to acquire. For example, a growing demand for loans and mortgages was as a result of a rise in the costs of college and homes. There was also a relaxed standard for lending, and it was easy to acquire mortgages. The failure by these low income earners to pay these mortgages and loans led to the beginning of the financial crisis, and the collapse of major financial institutions such as Citigroup and Lehman Brothers (Paulet, 17). The second argument is that the creation and development of a large pool of idle wealth leads to an increase in the demands of investment assets, fueling financial innovation and increasing the size of the financial sector. This is dangerous for the economy, because it may lead to speculative buying of financial assets. It is this speculative buying of financial assets that contributed to the collapse of financial institutions such as Lehman brothers during the 2008 crisis (Schiek, 39). It is important to denote that the collapse of the Lehman brothers was the beginning of the financial crisis, and it was followed by the collapse of several financial institutions and business organization such as General Motors. To protect the economy, the American government had to bail out companies such as General Motors, Citigroup, Bank of America, etc (Shiller, 22). The third argument is that income inequality leads to the emergence of a disproportionate political power. The major intention of the development of this political power is to protect the financial interests of the elite, or the wealthy members of the society. This would lead to the enactment of policies that have a negative impact on the stability of an economic system within the state (Schiek, 52). For example, setters of accounting standards, and federal government regulators were able to allow banking organizations such as Citigroup to move large number of liabilities and assets from the balance sheet, to a complex legal structure referred to as structured investment vehicles. This strategy helped to mask the financial weaknesses of the banking organization to the share holders and investors. The regulation of financial institutions in America is always influenced by powerful and wealthy companies and people (Schiek, 13). This is because they normally finance the political activi ties of candidates who would advance their agendas. In as much as McEwan and Miller believe that income inequality led to the emergence of the 2008 economic crisis, there are other reasons that led to the this crisis (MacEwan and John,15). One of the reasons given is the growth of the housing market in America. This demand led to speculative buying, leading to an increase in the prices of houses. People took mortgages, which did not have good security. However, in 2008, there was a correction in the housing prices, leading to a downward fall of the housing prices (Schiek, 57). Most Americans were unable to pay their mortgages, and this made banking and financial institutions to suffer massive losses because they were unable to recover their loans. This in turn led to the collapse of these financial institutions, affecting the economies that were heavily dependent on the American economy. Furthermore, it is the federal government that made it easy for people to acquire loans. This is because they initiated low interest rate, by lowering the federal fund rate target to 1.0%, from a figure of 6.5% (Shiller, 41). This made experts to denote that it was the easy availability of credit that led to a demand of houses, hence f uelling their increase. It is therefore prudent to denote that there is a need of restructuring the American economic system and regulatory institutions for purposes of protecting the economy from future crises. In fact, the government of President Obama realized on the need of regulating American financial institutions, and in 2008, and 2009, he initiated a series of measures aimed at meeting this objective (Shiller, 29). For example, President Obama introduced the Volcker rule, which was aimed at limiting the ability of banking organizations to engage in proprietary trading (Shiller, 19). The European Union also realized the need of regulating financial institutions and came up with the Basel III rule, which raised the capital of starting a banking business in Europe, and placing a limit on the banking rates of the European banks. In conclusion, the statement by MacEwan and Miller that income inequality contributes to a slowdown in economic development has some truth in it. For instance, due to income inequality, the poor and the middle class were engaged in borrowing from banks, for purposes of buying properties leading to a sharp increase in property prices. This was a factor that contributed to the emergence of the 2008 crises, and it is always referred to as the subprime crises. In a bid to protect the financial interests of big financial companies, the federal government agencies did not effectively regulate their financial activities. This allowed them to manipulate their financial records, hiding their weaknesses to shareholders and investors. It is therefore prudent to denote that McEwan and Miller are right when they assert that income inequalities was the main factor leading to the 2008 crisis, and there is a need of restructuring the economy, and improving the ability of the federal regulatory insti tutions. Works Cited: MacEwan, Arthur, and John A. Miller. Economic collapse, economic change: getting to the roots  of the crisis. Armonk, N.Y.: M.E. Sharpe, 2011. Print. Paulet, Elisabeth. The subprime crisis and its impact on financial and managerial environments  an unequal repercussion at European level. Newcastle upon Tyne: Cambridge Scholars Pub., 2012. Print.   Schiek, Dagmar. The EU economic and social model in the global crisis: interdisciplinary  perspectives. Farnham (Surrey): Ashgate, 2013. Print. Shiller, Robert J. Subprime solution how todays global financial crisis happened, and what to do  about it.. Princeton: Princeton Univ Press, 2012. Print.

The Old Man and the Sea :: Free Essay Writer

The Old Man and the Sea I believe that in the past three decades, the way society has treated he elderly has remained primarily the same. Some younger citizens have looked up to the elderly with respect, yet most continue to shun them and consider them useless and hopeless in a society such as ours. I think that the elderly population is continually losing respect from the new generations. Santiago, the elderly man in the novel The Old Man and the Sea, is respected by a young boy, Manolin, yet he is also looked down upon by many of the younger fishermen in the Cuban fishing village where he lives. This book is set in the late 1930's and, I as I see it, shows that societies all around the world have had a decline in respect for the older people in their environment since the beginning of the nineteenth century. An enormous number of issues have changed since Santiago's time, allowing the elderly to have the ability to do more in their old age and live in areas specifically designed for their needs. However, there is still an enormous lack of respect for the older people in society, and it is becoming worse every day. Younger citizens of our country make fun of older people, call them names, and believe that they are incapable of doing most things that the younger ones are capable of doing. When we believe they can no longer support themselves, we place our elderly relatives into retirement homes and "old folks' homes" as many call them. Sometimes they, themselves, do not wish to go to such a place, but we force them to, which many times is the wrong choice. Some younger people help the elderly, though, and try to support them, but few of these people can be found. It is a fact that when people get beyond a certain age, their memories begin depleting and they atrophy physically. However, as Santiago shows in the novel, older people have much knowledge about the world around them and enough strength to make it through hard situations if they are determined and have the will and courage to believe in a better tomorrow. In Santiago's community, it is shown that their is still a natural respect for elders, as is seen in Manolin's support of the old man. He was one of the dying breed that truly looked up to his elders and regarded their feelings and experiences with much respect.

A Raisin in the Sun – 2

In A Raisin in the Sun by Lorraine Hansberry, Beneatha wants to learn more about her heritage. She wants to get closer to her roots, and know more about it. The line, â€Å"How can something natural be eccentric? † (Hansberry 80 Act two Scene 1), shows off a defensive tone. This quote is said after George tells her that her natural hair looks eccentric. Her defensiveness over her hair shows her determination to be in touch with her heritage. Beneatha cut her hair because she thought it was too Caucasian looking.By Beneatha doing this it shows her determination. Beneatha, however, is not the only person with determination. Ruth, just like Beneatha, has determination. Ruth has the determination to keep her family in check, and to do what is best for them. Ruth, along with determination, has being strong as a character trait. She is expecting another baby, and is deciding whether to get an abortion or to keep the baby. â€Å"When the world gets ugly enough—a woman will do anything for her family. The part that's already living† (Hansberry 75 Act 1 Scene 2).Mama says this about Ruth to Walter when she figures ruth is going to get rid of the baby by getting an abortion. By thinking of and making this decision it shows Ruth's determination and how strong she is. Just as Mama said, a woman will do whatever it takes for her family. Later on in the play Ruth decides to keep the baby and not get the abortion. Walter has determination, as well as stubbornness. Stubbornness is a form of a strong character trait. Walter has to be pretty strong willed to be as stubborn as he is with wanting to open a liquor store with some of his buddies.Because of Walter's stubborn determination, he has been fighting with Ruth about opening a liquor store with his buddies. He plans on opening it with the insurance money that Mama is getting. Ruth and Mama both do not think that it is a good idea. Walter knows this and therefore upon knowing this his stubbornness shows. â€Å"Man say to his woman: I got me a dream. His woman say: Eat your eggs† (Hansberry 33 Act 1 Scene 1). In this part of the play Walter is telling Ruth about his idea to open the liquor store, but Ruth will not listen to him.Walter realizes this and starts to get a little defensive and stubborn about it. Therefore starting somewhat of a fight with Ruth. His defensiveness over his dream shows his determination. Just like Beneatha, Ruth and Walter, Mama has determination as well. Mama wants to keep the family together. She does not want the family to keep on fighting. Because of this determination to keep the family from fighting, and to keep them together, she goes out and buys a house with her insurance money that is in Clybourne Park. When Walter finds out he is upset about it. Son—you–you understand what I done, don’t you? I—I just seen my family falling apart today†¦ We couldn't of gone on like we was today. We was going backwards ‘ stead of forwards—talking 'bout killing babies and wishing each other was dead†¦ When it gets like that in life—you just got to do something bigger†¦ † (Hansberry 94 Act 2 Scene 1). In this quote Mama is trying to explain why she did what she did to Walter. This quote shows Mama's passion and her determination to keep her family from falling apart. Everyone has determination.In A Rasin in the Sun by Lorraine Hansberry; Mama, Ruth, Walter, and Beneatha all have a unique determination. Mama and Ruth both have determination to keep their family from falling apart. They both want what is best for the family. Beneatha was determined to learn more about her heritage. Walter was determined to open a liquor store. By the end of the play everything was settled and worked out. Ruth had decided to keep the baby, and they all decided to move into the house in Clybourne Park. It was a happy ending for the very determined Younger family. A Raisin in the Sun – 2 In A Raisin in the Sun by Lorraine Hansberry, Beneatha wants to learn more about her heritage. She wants to get closer to her roots, and know more about it. The line, â€Å"How can something natural be eccentric? † (Hansberry 80 Act two Scene 1), shows off a defensive tone. This quote is said after George tells her that her natural hair looks eccentric. Her defensiveness over her hair shows her determination to be in touch with her heritage. Beneatha cut her hair because she thought it was too Caucasian looking.By Beneatha doing this it shows her determination. Beneatha, however, is not the only person with determination. Ruth, just like Beneatha, has determination. Ruth has the determination to keep her family in check, and to do what is best for them. Ruth, along with determination, has being strong as a character trait. She is expecting another baby, and is deciding whether to get an abortion or to keep the baby. â€Å"When the world gets ugly enough—a woman will do anything for her family. The part that's already living† (Hansberry 75 Act 1 Scene 2).Mama says this about Ruth to Walter when she figures ruth is going to get rid of the baby by getting an abortion. By thinking of and making this decision it shows Ruth's determination and how strong she is. Just as Mama said, a woman will do whatever it takes for her family. Later on in the play Ruth decides to keep the baby and not get the abortion. Walter has determination, as well as stubbornness. Stubbornness is a form of a strong character trait. Walter has to be pretty strong willed to be as stubborn as he is with wanting to open a liquor store with some of his buddies.Because of Walter's stubborn determination, he has been fighting with Ruth about opening a liquor store with his buddies. He plans on opening it with the insurance money that Mama is getting. Ruth and Mama both do not think that it is a good idea. Walter knows this and therefore upon knowing this his stubbornness shows. â€Å"Man say to his woman: I got me a dream. His woman say: Eat your eggs† (Hansberry 33 Act 1 Scene 1). In this part of the play Walter is telling Ruth about his idea to open the liquor store, but Ruth will not listen to him.Walter realizes this and starts to get a little defensive and stubborn about it. Therefore starting somewhat of a fight with Ruth. His defensiveness over his dream shows his determination. Just like Beneatha, Ruth and Walter, Mama has determination as well. Mama wants to keep the family together. She does not want the family to keep on fighting. Because of this determination to keep the family from fighting, and to keep them together, she goes out and buys a house with her insurance money that is in Clybourne Park. When Walter finds out he is upset about it. Son—you–you understand what I done, don’t you? I—I just seen my family falling apart today†¦ We couldn't of gone on like we was today. We was going backwards ‘ stead of forwards—talking 'bout killing babies and wishing each other was dead†¦ When it gets like that in life—you just got to do something bigger†¦ † (Hansberry 94 Act 2 Scene 1). In this quote Mama is trying to explain why she did what she did to Walter. This quote shows Mama's passion and her determination to keep her family from falling apart. Everyone has determination.In A Rasin in the Sun by Lorraine Hansberry; Mama, Ruth, Walter, and Beneatha all have a unique determination. Mama and Ruth both have determination to keep their family from falling apart. They both want what is best for the family. Beneatha was determined to learn more about her heritage. Walter was determined to open a liquor store. By the end of the play everything was settled and worked out. Ruth had decided to keep the baby, and they all decided to move into the house in Clybourne Park. It was a happy ending for the very determined Younger family.

Customer Fulfillment in the Digital Economy

Customer Fulfillment in the Digital Economy Amazon. com E-tail Customer Fulfillment Networks Pioneer â€Å"The logistics of distribution Scorecard are the iceberg below the waterline of online bookselling.B-web type —Jeff Bezos, founder and CEO, Amazon. comAggregation (e-tail) /Agora (auctions, Zshops) hybrid model KEY PARTICIPANTS â€Å"Ten years from now, no one will remember whether Consumers and business buyers Context providersContent providersAmazon. com and small online merchants (Amazon. com associates, Zshops, auctions) Suppliers and b-web partners (publishers; producers [OEM]; distributors e. g. Ingram Micro, Baker & Taylor Books, and others) Customers Amazon. com spent an extra $100,000 upgrading shipping from the West Coast to the East Coast. All that will matter is whether electronic commerceGave people a good or bad experience.2 —David Risher, senior vice president for merchandising, Amazon. com Commerce services †¢ Infrastructure providers â€Å"This [the Amazon. com distribution warehouses and CFN] is the fastest expansion of distribution capacity in peacetime history. † 3 —Jeff Bezos, founder and CEO, Amazon. com Offering Amazon. com and online merchants (Amazon. com associates, Zshops, auctions) Amazon. om and merchants participating in auctions and Zshops Third party shippers (UPS & USPS) Amazon. com Drop shippers such as Ingram Technology providers such as Oracle, Net Perceptions, and i2 Technologies Third party shippers (UPS, USPS) The largest online e-tailer of books, music, videos, toys, and gifts Recently expanded service offering to include auctions (March 1999) and Zshops (September 1999)—an aggregation of merchants on its Web site Aspires to become a one-stop shop for merchandise on the Web CFN value proposition â€Å"Earth’s largest selection† of merchandise at competitive prices, a validated product assortment, nd consistent customer service from â€Å"home page to home delivery†Ã¢â‚¬â€œ24/7 URL http://www. amazon. com 360 Adelaide Street W, 4th Floor Toronto, Ontario. Canada M5V 1R7 Tel 416. 979. 7899. Fax 416. 979-7616 www. digital4sight. com  © 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. 1. 1 Customer Fulfillment in the Digital Economy Amazon. com few barriers to entry—but one of those barriers is customer fulfillment. In 1996–97, Amazon. com was largely alone in the e-tailing business. Now the Web is eeming with e-tailers like buy. com (which aggressively undercuts everyone else, including Amazon. com), CDNow, and barnesandnoble. com. There are also Web portal-run malls, many of which are copying and offering features (like the renowned â€Å"one-click shopping†) that have thus far differentiated Amazon. com. Yahoo’s online mall offers 7,000 stores with over four million items and walmart. com’s planned debut in 2000 poses a significant threat. Amazon. com’s first mover advantage, e-brand equity, and initial cost advantages (stemming from lack of investments in prime real estate for storefronts) are gradually eroding.Its margins are falling, while operating expenses from mergers and acquisitions are increasing. As of the end of 1999, Amazon. com expected to post approximately $600 million in losses for the year, at a time when growth in book sales is falling (from about 800% in 1997 to a little over 100% in 1999). On the plus side, customer retention rates exceeded 72% in the third quarter of 1999. 8 But average revenue per customer in 1998 was $98. 4, while average selling, general and administrative (SG&A) and distribution costs per customer (excluding cost of goods sold) were about $71. 30, leading to an average net earnings loss of around 21%. Amazon. com Founder Jeff Bezos wants to transform Amazon. com into the largest and most customer-friendly one-stop shop on the Web. Already the largest online e-tailer of books, music, and videos, the company has expanded its product offering to include toys, gifts, and electronics, and in September 1999 launched â€Å"Zshops,† a new initiative (online flea market on Amazon. com’s Web site) which offers customers â€Å"universal selection. †4 Zshops empower small merchants and customers to set up online stores on the Amazon. com Web site for a monthly fee of $10, and a transaction fee of 1–5% of every sale.With a market capitalization of approximately $31. 4 billion (as of November 1999), 12 million loyal customers, 18 million items on sale, projected 1999 sales of $1. 4 billion, and the most recognized brand name on the Internet,5 Amazon. com aspires to become the supermall of choice for online shoppers. Its recipe includes innovation driven by â€Å"customer obsession† and the ability to provide a secure, enjoyable shopping experience online, but its dominance is due to a customer fulfillment process that delivers. A carefully orchestrated and adroitly executed â€Å"sell all, carry few† strategy explains Amazon. com’s success ith e-tail customer fulfillment. Its business web (b-web) (for books) includes Ingram Book Group and Baker & Taylor, the two largest book wholesalers in the US, as well as dozens of others. In 1998, Amazon. com obtained 60% of its books through Ingram, which operates seven strategically located US warehouses. Amazon. com pays Ingram a wholesale markup a few percentage points above the publisher’s price for its drop shipping services. 6 How has Amazon. com responded to these formidable challenges? First, to increase revenue per customer, Amazon. com added product lines or capabilities practically every six weeks in 1999.In February, the company bought 46% of drugstore. com. The following month, it launched online auctions. It bought a 35% stake in homegrocer. com in May, 54% of pets. com in June, an d 49% of gear. com in July. The Zshops and All Product Search (a â€Å"search the Web† service) initiatives have moved it even closer to its goal of providing â€Å"earth’s largest selection. † For Amazon. com, the Zshops initiative is 80–90% grossmargin rich, since its marginal costs for providing one-click shopping and credit card collection on Zshops is nearly zero. In 1999, Amazon. com opened five new automated distribution centers of its own in the US (this is in ddition to two centers already operational in Seattle and Delaware). The intent is to improve declining margins in a cutthroat business (e. g. by sourcing books directly from publishers), lessen dependence on Ingram and other distributors, and extend and control its online fulfillment process to enhance competitive advantage. Amazon. com now offers its customers same to next day shipping (in the US) on most items. In the 1999 holiday season, the company sent more packages—perhaps in e xcess of 15 million—to more people than any other e-tailer or mail-order retailer in the country. 7 Amazon. com’s leadership in customer fulfillment etworking (CFN) will be critical to its success as the landlord of the largest shopping mall on the Web. Second, its customer fulfillment networking (CFN) strategy is designed to increase gross margins by sourcing directly from publishers and other producers, rather than from wholesalers (e. g. distributors like Ingram) who provide drop shipping for a premium. Amazon. com will also reduce costs per sale by cross-docking orders (books, electronics, and toys all in one order) at the warehouse closest to the customer through state-of-the-art demand forecasting and optimization solutions from i2 Technologies. 10 Business contextE-tailing is fast becoming a crowded marketplace with  © 1. 2 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. Customer Fulfillment in the Digital Economy Amazon. com So, what are the implications of Amazon. com’s push into more warehouses for better customer fulfillment? While the investment in five additional warehouses has been immense (in excess of $200 million), it enables same or next day fulfillment in most cases—driving greater customer satisfaction and loyalty, and higher evenues and profits per customer. It also lowers operating expenses and empowers Amazon. com to respond to pressures from Wall Street for profits. The strategy appears to be paying off—5. 69 million unique Web users (excluding its 12 million registered customers) shopped at Amazon. com in the 1999 holiday season (an 81% increase over 1998), with average spending per customer of $128 (a 30% increase over 1998). 14 However, maintaining stock in seven warehouses also increases inventory carrying costs, which the company will need to balance and contr ol through efficient customer fulfillment planning and execution. 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. Less compelling High Complex*E-BRAND AS BARRIER TO ENTRY E-CUSTOMER EXPECTATIONS AMAZON. COM (Circa 2001)†¢ Landlord of largest Web supermall†¢ Universal selection, one-stop shopping, and same day customer fulfillment = competitive advantage†¢ Revenues: $2. 7 Billion (est. )†¢ Registered Customers: 19. 5 MM†¢ Items Offered: >18 MM AMAZON. COM (1998)†¢ Book E-tailer†¢ Investment in brand building†¢ Customer fulfillment largely outsourced to Ingram and Baker & Taylor†¢ Revenues: $610 MM†¢ Registered Customers: 12 MM†¢ Books Offered2. 5 MM Low Low This strategic shift (figure 1) makes sense because Amazon. com’s e-brand will be a less compelling barrier to entry beyond 2000, co mpared to its customized, collaborative, and integrated online fulfillment capability for â€Å"orders of one. † According to Andrew N. Westland, Amazon. com’s vice president of warehousing, transportation and engineering, it would risk losing its competitive advantage from its pioneering and innovative one-to-one customer fulfillment excellence if it hired another company to handle distribution.As he points out, â€Å"we would be the teacher and then they would offer those services to our competitors. †13 Designed and built for online order fulfillment, Amazon. com’s CFN and warehouse distribution system is among the first of its kind (another is Webvan). As such, it confers competitive first mover and learning curve advantage. ONLINE PRODUCT ASSORTMENT Amazon. com’s business model consists of two different but complementary revenue, pricing, and profit models. In the case of auctions and Zshops, relatively small topline revenues (at least as of t he end of 1999) contribute high gross and operating margins.In contrast, for the traditional e-tailing model, lower gross and operating margins offset high topline revenues. 11 The company wants to utilize both models: cross-sell the high margin Zshops/auctions offering to its registered e-tailing customers (immediately enhancing both revenue and profits per customer), and cut the cost of sales and operating expenses through efficient customer fulfillment. High Simple Third, its strategy of providing hassle-free, same or next day fulfillment on most items will enhance customer satisfaction and loyalty, driving repeat business, referrals, and increased market share.CUSTOMER FULFILLMENT AS CORE-COMPETENCE High * Complexity of product assortment implies both high breadth and depth of product lines offered. Figure 1. Amazon. com’s strategic shift: from book e-tailer to landlord of Web super mall. 12 Value proposition Amazon. com’s value proposition is â€Å"earth’s largest selection—24/7, at a competitive price. † The world’s most â€Å"customer-centric company† gives its customers what they want (universal selection), how they want it (in one consolidated package), and when they want it (same or next-day by the year 2000), by orchestrating an enjoyable buying experience at the front end and einforcing it with seamless fulfillment at the back end. Bezos, who describes his team members as â€Å"customer obsessed†¦genetic pioneers,†15 can take credit for numerous innovations, including customer recognition and one-click shopping, free book reviews, recommendations (suggestive selling), Purchase Circles (best seller list by region, country, company, and industry), All Product Search (shop the Web), free e-greetings, Auctions, Zshops, and seamless customer fulfillment. Each of these has been a first on the Web, and competitors have copied most of them. Recent innovations include a system that lets shoppers u t together a big order and then send each item, tagged with an individual message, to a different individual and address (September 1999); a â€Å"wish list†Ã¢â‚¬â€much like a wedding registry—that lets people tell the world what gifts they want to receive; and an â€Å"Amazon. com anywhere† initiative with Sprint (announced December 8, 1999) that facilitates wireless shopping through Sprint PCS Internet-enabled smart cellular phones. 16 1. 3 Customer Fulfillment in the Digital Economy Amazon. com 1 Customer places order; credit card processed for payment 4 E-Customer All items picked, packed and assembled at nearest warehouse & shipped ia UPS or US Postal Service 5 Order delivered from the nearest warehouse via UPS/USPS AMAZON. COM WAREHOUSE WWW Electronics OEM Amazon. com’s servers in Seattle Demand forecasting visibility and optimization through i2’s Supply Chain OptimizationSoftware 2 Customer order parsed out to appropriate suppliers (if not stocked in Amazon. com warehouse). Books sourced from Ingram or other book publisher Music company LEGEND Inventory Information 3 Producers dispatch goods to Amazon. com warehouse. Figure 2. Amazon. com’s customer fulfillment network (CFN)—circa 2000. CFN strategy Amazon. com is a CFN pioneer. Its innovative CFN trategy enables true dynamic commerce that provides a customized experience to not only fulfill, but also create demand—profitably, and in real-time. This is a virtuous cycle realized through integration of the customer relationship management applications with the order fulfillment applications and its b-web, as well as intelligent and dynamic demand-supply synchronization. It is rendered possible by the following CFN value drivers: †¢ †¢ †¢ †¢ Business processes and applications Sourcing multiple line items from disparate suppliers and assembling them to a customer’s order and specifications for same/next day fulfillment invo lves ramatically greater logistics and supply chain complexity than delivering huge pallets from warehouses to shelf spaces (brick-and-mortar retail). Dynamic and intelligent personalization that ensures dynamic content insertion and cross-selling (enhancing revenues and profits per customer) while matching the customer’s demands with Amazon. com’s fulfillment abilities Virtual integration across the b-web (from customer to supplier and warehouses) that ensures synchronicity across business processes, delivering intelligent and profitable order fulfillment Dynamic demand and supply planning and ptimization to minimize inventory carrying and transportation costs and reduce cycle times, Three factors—selling an expanded selection of products online (Amazon. com offers 18 million items), the need to move a large volume of small parcels, and rising customer expectations—combine to put new pressures on order fulfillment systems. According to Toby Link, CEO of e-Toys, â€Å"Inventory management is the great ecommerce business process that no one seems to know much about. It is the true barrier to entry. †17 Amazon. com, which has depended largely on a drop shipping and just-in-time arrangement for books with  © 1. 4 aximizing profit and service levels Maximum visibility and responsiveness to supply and demand variability and anomalies through dynamic exception notification (e. g. an electronic alert signal if something goes wrong) 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. Customer Fulfillment in the Digital Economy Amazon. com Order Management System (OMS) Credit card data verification, e-ordering (if needed), reconcilliation of shipping and customer charges Inventory Management System (IMS)Which items and categories to stock, where and in what quantities? What is available and what needs to be ordered? I2’s Demand Optimizer Inventory turnover data by product, category, country, region, state, industry, etc. I2’s Available to Promise (ATP) Can we fulfill these orders profitably? Oracle database of products and consumer profiles All Product Search What are customers looking for? Customer Orders What are they buying? Warehouse & Transportation Management System (WMS & TMS) Pick, pack and ship orders most efficiently & profitably Purchase Circles (Best seller listing by country, region, industry or company)WWW E-Customer New Customer Profile Who are the e-customers (demographics, etc. )? What are their preferences? Suggested Selling (Cross-sell and Net Perceptions up-sell profitable, Collaborative Filtering: in-stock items that What items and categories of customers want) products are customers likely to buy based on affinity? a nagement (CRM) Decision Support, S upply Chain Planning & Execution Customer Relationship M Figure 3. Amazon. com’s suite of CFN applications. 20 Ingram and Baker & Taylor, has now primarily moved to a from-stock hybrid model (that also includes the other options) with its seven US warehouses. In ddition to enlarging its Seattle and Delaware warehouses in 1999, the company has invested over $200 million to lease five distribution and warehousing facilities in Fernley, Nevada; Coffeyville, Kansas; Campbellsville and Louisville, Kentucky; and McDonough, Georgia. of Digital Equipment Alpha Servers and Netscape Commerce Servers built around an Oracle database server and Oracle Financials Enterprise Resource Planning (ERP) system. 21 According to Jeff Bezos, 80% of the company’s investment in software development since its founding in 1994 has not gone into its famously user-friendly screens, but to back-office logistics. 2 In 1998, two-thirds of Amazon. com’s 2,100 employees worked on customer fulfillment. 22 These seven warehouses, comprising 3. 5 million square feet of total space, will en sure fulfillment in 24–48 hours in most cases in the US. 18 The CFN comprising Amazon. com’s warehouses, b-web of suppliers and drop shippers, and end-to-end integration is specifically designed for online retailing from the ground up (i. e. , shipping merchandise item by item to individual customers). 19 It is one of only a handful of such networks. Amazon. com developed most of its own front end e-commerce applications, including page design and rder management systems (OMS). The acquisition and incorporation of Junglee, a highly sophisticated XML-based shopping bot, forms the basis of Amazon. com’s New Product Search application. It sourced its highly acclaimed suggested selling collaborative filtering software from Net Perceptions and recently acquired a Supply Chain Planning and Optimization package from i2 Technologies. 24 All other software—including middleware and the much-praised and patented one-click shopping application—is customized fo r Amazon. com or proprietary, and zealously guarded for competitive advantage. Amazon. com’s CFN, including its network of istribution centers, is illustrated in figure 2; figure 3 shows CFN applications deployed. Amazon. com’s initial hardware and software consisted  © 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. 1. 5 Customer Fulfillment in the Digital Economy Amazon. com Amazon. com is in the process of integrating its b-web (suppliers, distributors, and customers) with its supply chain planning (SCP) and ERP, as well as management systems for orders (OMS), inventory (IMS), warehouse WMS), and transportation (TMS) (figures 2 and 3). This strategy will lead to intelligent demand forecasting, optimization, and profitable distribution execution. The customer relationship management (CRM) suite at the front end, which consists of one-to-one personalization and collaborative filtering from Net Perceptions and Amazon. com’s own order management system (OMS), works in sync with i2’s Supply Chain Planning, Optimization (SCPO) and Decision Support Systems (DSS) at the back end. These form a virtuous cycle that creates profitable demand while delivering a customized buying experience in real-time, as well as ntelligent, profitable fulfillment that ensures customer satisfaction and referrals. Figure 3 presents a hypothesis of how the applications work to deliver intelligent end-to-end order fulfillment: †¢ †¢ †¢ †¢ †¢ This is a true â€Å"sense and respond† CFN based on Amazon. com’s move towards a â€Å"real-time inventory solution† (if the customer can order it, it is available, and can be shipped) to drive customer loyalty, revenues, referrals, and profitability. Data is gathered initially from the customer to form a customer profile in the Oracle data base. Information on items customers are looking for, and ctually buy, is gathered through the All Product Search function and customer orders, respectively. Data from All Product Search drives the categories and product lines that Amazon. com keeps adding to its colossal assortment. The buying data is queried to yield inventory turnover (for every item) by zip code, state, country, business, company, and industry. The inventory turnover data is used to stratify Amazon. com’s inventory on an A, B, C basis (e. g. ‘A’ items could be best sellers, ‘B’ items have medium turnover, and ‘C’ items are one-off orders). The inventory turnover data (XML tagged by zip ode) is fed back to the customer by way of Purchase Circles (best-seller listing) to seduce the customer into buying the item. As well, data from the customer profile and previous buying patterns are mined (using collaborative filtering from Net Perceptions) to predict affinities betwe en customers and products. This enables real-time suggestive selling recommendations (the right suggestions to the right buyer at the right time—right now) relevant to each customer’s buying objectives. These recommendations convert browsers into buyers, increase revenue and profits per customer, and stimulate repeat buying. 25 2’s demand planner uses the inventory turnover and buying data to dynamically anticipate customer needs by accurately predicting customer demand on an ongoing basis. By integrating these with i2’s available-to-promise (ATP) inventory management and distribution systems, Amazon. com ensures that B-web organization Amazon. com’s b-web is an Aggregation (e-tail) and Agora (auctions and Zshops) hybrid model powered by its CFN. Win-win b-web relationships and electronic integration with suppliers, distributors, publishers, producers, and software and hardware providers account for Amazon. com’s winning experience and fulfi llment.These partners contribute significantly to, and derive benefits from, its success. In addition to large and assured revenue streams, learning from this e-tailing and CFN pioneer assures competitive advantage in the high velocity arena of e-commerce. In book e-tailing, for instance, Amazon. com ties Ingram’s inventory data to its customer interface. This gives Amazon. com available-to-promise (ATP) capabilities that lets customers know when they can expect to receive their merchandise. As soon as an order comes in, Amazon. com sends it to Ingram electronically (if it doesn’t carry the ordered item); Ingram then ships the rder, usually the same or next day, to Amazon. com’s customer fulfillment center for cross-docking and shipping via UPS/USPS. Key lessons Four factors explain Amazon. com’s in success e-tailing: †¢  © 1. 6 it maintains an optimum inventory of its most ordered books, CDs, videos, toys, and electronics in its warehouses for in- stock fulfillment. Continuous reconciliation of order and inventory data via the ATP function enables Amazon. com to commit to lead times on its Web site that it can profitably fulfill. Distributors like Ingram will drop ship one-off items (‘C’), or Amazon. com will order them (through theOMS) on a just-in-time basis from other suppliers for cross docking at its warehouse closest to the customer (figure 2). Intelligent distribution, warehousing (WMS), and transportation (TMS) optimization ensures that Amazon. com picks, packs, and transports orders for delivery, via US Postal Service (60% of orders) or UPS (40% of orders), â€Å"from buy button to customer doorstep† 24–48 hours for in-stock items, and within seven days for others, in the US. 26 First, it translated its customer-centric understanding of market need into an easy-to-use, intuitive buying experience that pleases customers and drives evenues and referrals 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. Customer Fulfillment in the Digital Economy Amazon. com †¢ Second, Amazon. com invested tens of millions of dollars in building the most valuable brand on the Web Third, Amazon. com built loyalty and barriers to entry by investing in innovative technology solutions such as suggested selling from Net Perceptions, Supply Chain Optimization (i2), Purchase Circles, and All Product Search, and integrating them into a irtuous cycle for dynamic commerce Fourth, and arguably most important, Amazon. com’s commitment to fulfillment has translated into deep and effective b-web relationships with distributors and suppliers like Ingram and a core competence in one-to-one inventory management and distribution †¢ †¢ Thanks to these four factors, Amazon. com forecasts a customer base of 22. 3 million and revenues of $3. 15 billion b y 2002. The company’s strategic investments in its warehouses, technology, and b-web integration (CFN) to enable reliable and accurate same or next day customer fulfillment are a key part of its first mover dvantage and a significant barrier to entry. Amazon. com can strategically leverage this â€Å"killer app† CFN in a number of ways:26 †¢ †¢ †¢ First, Amazon. com can offer excess capacity in its warehouses to Zshops’ merchants on a â€Å"fee for fulfillment† basis. This would accrue considerable marginal revenues for a significantly lower marginal cost incurred. Second, by installing Web-enabled buying kiosks (as well as interactive television sets and wireless Webenabled devices like PDAs) at high traffic areas in malls, office buildings, and other locations, it can move its Web buying experience to the real world for ess Web-savvy customers. Third, and perhaps most radical and innovative, Amazon. com can build free customer buying port als for each of its registered, loyal customers. For an incremental cost, Amazon. com can create customized buying pages (similar to Dell’s Premier Pages for its business-to-business customers) that will allow customers to go online and enter their buying requirements as needed. Amazon. com can then deliver the items it carries, and turn over remaining orders to its Amazon. com associates, Zshops, or other b-web affiliates for fulfillment. —Arindam (Andy) De  © 2000 Digital 4Sight Corp.Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. 1. 7 Customer Fulfillment in the Digital Economy Amazon. com Amazon. com: Key Performance Indicators (see Table 1 and figures 4a to 4f) Table 1. Comparison of 1998 performance: Amazon. com, Barnes & Noble, and Borders. 28 †¢ †¢ †¢ 117. 8 million US adults, or 60% of the adult population, recognize the Amazon. com brand name, making it the most recognized brand name on the Web, followed by Priceline and e-Bay. 29 Amazon. com, with a low customer acquisition cost of around $2930 compared with $109 for a new e-tailer) and a customer retention rate of over 72%31 enjoys huge competitive advantage in terms of repeat revenue streams and significant growth in its customer base. Analysts estimate that Amazon. com’s customer base will be about 22. 3 million users by 2002 (figure 4a). 32 With an average revenue per user of $141. 25 (figure 4b), this would translate into $3. 15 billion in revenues. Gross margins over the same period would increase from 22% in 1999 to about 25% in 2002. †¢  © 1. 8 Amazon. com, with $610 million in sales in 1998 and revenue growth of 230% (June 1998–June 1999), had ero days of receivables, 23 days of inventory, 87 days of payables (figure 4c) and a positive â€Å"gap in finance cycle†(figure 4d) of 64 days. 33 This implies that Amazon. com, unl ike its competitors, is actually financing working capital with cash flow from suppliers. Amazon. com’s revenue per employee (1998) was $290,476 (figure 4e) and revenue per dollar of fixed assets (figure 4f) was $20. 47 (appreciably higher than the competition). Figures 4e and 4f show an interesting correlation between Amazon. com’s market capitalization of $31. 40 billion and its revenue per employee and revenue per dollar of fixed ssets, against the competition. This may help explain the significant upward disparity in market capitalization enjoyed by the company vis-a-vis its clicks-and-mortar competitors. 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. Customer Fulfillment in the Digital Economy Amazon. com REVENUES ($ MILLIONS) 19,500 22,300 $3,150 20 $2,700 2500 16,500 2000 13,300 15 $2,100 1500 10 $1,403 1000 6,200 Total reven ue per user Annual net income per user $127. 27 Gross margins $138. 6 25% 25 $105. 49 90 $98. 39 22% 22% 21% 21% 20 60 15 30 10 0 ($8. 08) 5 500 30 $141. 25 120 $ PER USER 3000 $150 NUMBER OF REGISTERED USERS (MILLIONS) Revenues ($millions) Number of registered users (millions) GROSS MARGINS (%) 25 $3500 $610 -30 ($19. 57) ($20. 09) 5 ($36. 73) ($45. 37) 0 1998 1999 2000E 2001E -60 2002E Figure 4a. Amazon. com: Revenues & number of registered users (1998–2000). 34 0 1998 1999 2000E 2001E 2002E Figure 4b. Amazon. com: Revenues & net income per user, registered users and gross margins (1998–2002). 35 80 64 INVENTORY TURNOVER OR CASH-TO-CASH CYCLE 60 Inventory turnover (1998) Gap† in finance cycle (1998) Revenue growth (1998-99) 400% 40 20 16. 14 0 -20 300 2. 4 AMAZON. COM 1. 83 B&N BORDERS 230. 1% 200 -40 -60 -80 100 (80) 6. 3% -100 Figure 4c. Book retail: Age of receivables, payables, and inventory (1998). 36  © 2000 Digital 4Sight Corp. Reproduction by any mean s, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. REVENUE GROWTH (%) 0 (90) 14. 5% 0 Figure 4d. Book retail: Revenue growth (June 1998–1999) vs. inventory turnover & gap in finance cycle (1998). 37 1. 9 Customer Fulfillment in the Digital EconomyAmazon. com $350,000 300,000 $35 Revenue per employee (1998) Market capitalization ($ billions) $30 Revenue per $ of fixed assets (1998) $35 Market capitalization ($ billions) $31. 41 25 $30 $31. 41 $30 $20 200,000 $15 150,000 100,000 $103,641 $10 $95,404 50,000 0 $20 15 $15 10 $10 $5. 89 $1. 21 $0 $25 $20. 47 5 $5 $1. 64 20 $1. 64 0 $5. 26 MARKET CAPITALIZATION ($ BILLIONS) $25 REVENUE PER $ OF FIXED ASSETS ($) 250,000 MARKET CAPITALIZATION ($ BILLIONS) REVENUE PER EMPLOYEE $290,476 $5 $1. 21 $0 AMAZON. COM B&N BORDERS Figure 4e. Book retail: Revenue per employee (1998) and market cap (November 1999). 38Figure 4f. Book retail: Revenue per $ of fixed assets (1998) and market cap (November 1999). 39 1. Anthony Bianco, â€Å"Virtual Bookstores Start to Get Real,† Business Week, 27 October 1998. 2. Saul Hansell, â€Å"Amazon’s Risky Christmas,† The New York Times, 28 November 1999. 3. Ibid. 4. Jeff Bezos quoted by Stefani Eads, â€Å"Is Amazon Shopping for Profits in its Zshops? † Business Week, 12 October 1999. 5. According to Opinion Research Corp. , 117. 8 million Americans, or 60% of the US adult population, recognizes the Amazon brand name, making it the most valuable brand name on the Web. 6. Anthony Bianco, op. cit. 7.Saul Hansell, op. cit. 8. As quoted in SS Investor Equity Research Report on Amazon, December 1999. 9. Analysis and estimates by Lauren Cook Levitan, analyst, Banc Boston Robertson Stevens, August 1999. 10. Jeanne Lee. â€Å"i2 Learns What Not to Say When Talking to Analysts,† Fortune, 29 March 1999. 11. Jeff Bezos, quoted in an interview with Robert D. Hof, Business Week, 31 May 1999. 12. Strategy map based on Digital 4Sight analysis of Amazon’s etailing strategy. 13. Saul Hansell, op. cit. 14. Media Metrix numbers quoted in â€Å"Amazon, e-Bay Get Most Holiday Visitors,† Los Angeles Times (Home Edition), 4 January 2000. 5. Jeff Bezos quoted by Chip Bayersin â€Å"The Inner Bezos,† Wired, (March 1999). 16. Amazon press release from its Web site, URL http://www. hoovers. com/cgi-bin/offsite? url= http://www. amazon. com/exec/obidos/subst/misc/investorrelations/investor-faq. html/002-5319771-2477605. 17. John Evan Frook, â€Å"Missing Link Emerges: Inventory Management,† Internetweek, 9 March 1998. 18. Bob Tedeschi, â€Å"Many Internet Companies Have Focused on Attracting Customers. The Bigger challenge Is Fulfilling Orders,† The New York Times, 27 September 1999. 19. Katrina Booker, â€Å"Amazon vs. Everybody,† Fortune, 8 November 1999: 120. 20.Digital 4Sight hypothesis based on secondary research. 21. Customer case study on Oracle’s Web site, URL: http://www. oracle. com/customers/ss/amazon_ss. html. 22. Anthony Bianco. op. cit. 23. Mary Beth Grover, â€Å"Lost in Cyberspace,† Forbes, 8 March 1999. 24. Jeanne Lee, op. cit. 25. Product data from Net Perceptions Web site. URL:http://www. netperceptions. com/product/home/0,,1091, 00. html. 26. Michael Krantz, â€Å"Cruising Inside Amazon,† Time, (December 1999). 27. Digital 4Sight analysis of Amazon. com’s e-tailing strategy. 28. Digital 4Sight Financial Ratio Analysis based on P&L and balance sheet data sourced from www. oovers. com.  © 1. 10 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. Customer Fulfillment in the Digital Economy Amazon. com 29. Opinion Research Corp. survey quoted in â€Å"Equity Research Report on Amazon,† SS Investor, December 1999. 30. McKinsey & Company Data quoted in â€Å"Online Customer Acquisition Costs† Business 2. 0, (November 1999): 16-17. 31. As quoted in â€Å"Equity Research Report on Amazon. com,†SS Investor, December 1999. 32.Analysis and estimates by Lauren Cook Levitan, op. cit. 33. Gap in Finance Cycle = Days of Payables – (Days of Receivables + Days in Inventory). 34. Analysis and estimates by Lauren Cook Levitan, op. cit. 35. Digital 4Sight Financial Ratio Analysis, op. cit. 36. Ibid. 37. Ibid. 38. Ibid. 39. Ibid. 360 Adelaide Street W, 4th Floor Toronto, Ontario. Canada M5V 1R7 Tel 416. 979. 7899. Fax 416. 979-7616 www. digital4sight. com  © 2000 Digital 4Sight Corp. Reproduction by any means, or disclosure to parties who are not employees of Digital 4Sight member organizations is prohibited. Thank you for your cooperation. 1. 11