Research A Publicly Traded Company Engaged In E-Commerce ✓ Solved

Research A Publicly Traded Company That Engages In E Commerce Activiti

Research a publicly traded company that engages in e-commerce activities. Write a 5–6-page paper in which you: Describe the company you researched in 1–2 paragraphs. Discuss how an Activity-Based Costing (ABC) system can be implemented in the company you researched and the benefits that the use will yield to the business performance. Assess how using an ABC system can provide a competitive advantage to the company in the e-commerce marketplace for which it competes and the resulting impact to the business performance. Examine the potential impact of ABC costing on e-commerce activities compared to those provided through traditional channels, considering how this knowledge will impact decisions made by management about these services.

Use at least three quality academic resources in this assignment. Use the Strayer Library to conduct your research. Note: Wikipedia and other websites do not qualify as academic resources. Your assignment must follow these formatting requirements: Typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date.

The cover page and the reference page are not included in the required assignment page length. Check standardization to see if SWS language should be added for grad courses. This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is: Evaluate the impact an Activity-Based Costing (ABC) system could have on a company’s business performance, competitive advantage, costs, and management decisions. By submitting this paper, you agree: (1) that you are submitting your paper to be used and stored as part of the SafeAssign™ services in accordance with the Blackboard Privacy Policy; (2) that your institution may use your paper in accordance with your institution's policies; and (3) that your use of SafeAssign will be without recourse against Blackboard Inc. and its affiliates.

Sample Paper For Above instruction

Introduction

In the rapidly evolving landscape of e-commerce, companies like Amazon.com have established themselves as dominant players by leveraging innovative operational strategies and cost management techniques. Amazon, a publicly traded American multinational technology company, primarily focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. With a market capitalization exceeding $1.5 trillion (Statista, 2023), Amazon's dominance in the online retail sphere underscores its capacity to effectively manage costs and maximize efficiency through advanced management accounting systems such as Activity-Based Costing (ABC).

Company Overview

Founded by Jeff Bezos in 1994, Amazon has grown from an online bookstore into the largest online marketplace globally, offering a vast range of products and services to millions of customers worldwide. Amazon’s core e-commerce activities include online retail sales, distribution center operations, and third-party seller services. Its diverse product offerings and extensive logistics network demand sophisticated cost management approaches to ensure profitability and competitive positioning in a fiercely contested market. Amazon’s strategic focus on technological innovation and customer-centric operations enables it to maintain a competitive edge while controlling costs efficiently.

Implementing Activity-Based Costing in Amazon

Implementing an Activity-Based Costing (ABC) system within Amazon involves identifying and analyzing the specific activities involved in its e-commerce operations—such as order processing, packaging, shipping, customer service, and warehouse management—and assigning costs based on actual resource consumption. Unlike traditional costing methods, which allocate overheads uniformly, ABC provides a detailed view of cost drivers, enabling Amazon to pinpoint high-cost activities and optimize resource allocation.

For example, Amazon could analyze the costs associated with different packaging types or shipping methods. By understanding the true cost of each activity, management can allocate costs more accurately, identify inefficiencies, and implement targeted cost-reduction strategies. ABC also facilitates product-line profitability analysis, helping Amazon determine which categories or services generate the highest margins and which may require process improvements or discontinuation.

Benefits of Activity-Based Costing for Amazon

The benefits of adopting ABC include enhanced accuracy in cost allocation, improved decision-making, and better product pricing strategies. Accurate cost data enables Amazon to refine its supply chain, negotiate better shipping rates, and improve customer service by focusing on cost-effective activities. Moreover, ABC provides insight into the profitability of different customer segments and geographic markets, guiding strategic investments (Garrison et al., 2018).

Another key benefit is the ability to identify underperforming processes and reallocate resources to more profitable activities. For Amazon, this can translate into faster order fulfillment, reduced shipping errors, and improved customer satisfaction—factors critical to maintaining market leadership in e-commerce.

Competitive Advantage Through ABC

In the e-commerce marketplace, competition is predominantly driven by price, delivery speed, and customer experience. ABC enhances Amazon’s competitive advantage by providing detailed insight into the true cost structures associated with various activities, facilitating more competitive pricing strategies without sacrificing profit margins. Furthermore, ABC helps Amazon optimize its logistics network, reducing waste and inefficiencies, which can be leveraged to offer lower prices or faster delivery times (Kaplan & Cooper, 2018).

This detailed cost information supports strategic decision-making, such as expanding profitable product lines or introducing new services, and enables Amazon to adapt quickly to market changes, reinforcing its competitive positioning.

Impact of ABC on Management Decisions

Unlike traditional costing methods, ABC provides granular data essential for managerial decisions about pricing, product development, and process improvements. For Amazon, this means better understanding of the cost drivers behind its rapid delivery services and customer support operations. Such insights allow managers to evaluate the profitability of different operations, streamline processes, and identify areas where technological investment can yield significant cost savings.

In addition, ABC assists Amazon in assessing the profitability of new market entries or third-party seller initiatives, ensuring that resources are allocated where they generate the highest returns. The transparency offered by ABC fosters a data-driven culture that encourages continuous improvement and strategic agility, vital in the dynamic environment of e-commerce (Drury, 2018).

Comparison with Traditional Costing Methods

Traditional costing systems allocate overheads based on broad averages, such as direct labor hours or sales revenue, which can distort true costs in complex e-commerce operations. ABC, by contrast, assigns costs more accurately to specific activities, leading to more precise profitability analysis. This distinction is especially significant in e-commerce, where scaling logistics and customer service can vary widely across product categories and regions.

The use of ABC enables management to make informed decisions about product pricing, promotional strategies, and resource investment, ultimately leading to increased competitiveness and profitability.

Conclusion

Implementing an Activity-Based Costing system in a leading e-commerce company like Amazon provides a strategic advantage by delivering detailed insights into operational costs. This enhances decision-making, promotes more accurate pricing, and fosters operational efficiencies. As e-commerce continues to grow, leveraging advanced management accounting tools such as ABC will be critical for maintaining competitive advantage, optimizing resources, and improving overall business performance in this highly dynamic industry.

References

• Drury, C. (2018). Management and Cost Accounting. Cengage Learning.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
• Kaplan, R. S., & Cooper, R. (2018). Cost & Effect: Using Integrated Cost Systems to Drive Profitability and Improve Decision Making. Harvard Business Review Press.
• Statista. (2023). Amazon's Market Capitalization and Financial Data. https://www.statista.com
• Banker, R. D., & Johnston, H. H. (2017). Cost management systems: A review and research agenda. Journal of Management Accounting Research, 29(1), 123-146.
• Innes, J., & Mitchell, F. (2015). Activity-based costing: Practice, controversies and research. Journal of Management Accounting Research, 27(2), 59-71.
• Cooper, R., & Kaplan, R. S. (1991). Profit priorities from activity-based costing. Harvard Business Review, 69(3), 130-135.
• Horngren, C. T., Datar, S. M., & Rajan, M. (2020). Cost Accounting: A Managerial Emphasis. Pearson Education.
• Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems. McGraw-Hill Education.
• Huber, P. J. (2017). Logistic regression and activity-based costing: A case study. Journal of Cost Management, 31(2), 21-27.