Recovery of incurred losses on Amazon’s Fire Phone Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Recovery of incurred losses on Amazon’s Fire Phone Case Study Solution

Abstract

Amazon.com is the second largest e-commerce company which sells its products and services across the globe. Apart from their domination in e-commerce, they wanted to rule the Cellular Arena by introducing their own Cell Phone device called Fire Phone. Critical decisions and millions of dollars have been invested in implementing and introducing the device to the world. However, it didn’t meet the customer’s expectations and the device failed in the market resulting in huge loss to the company and the investors. They have decided to kill the project and sell the remaining devices for almost 1/3^rd of their original price. This case study is a way to analyze the reason why the device failed in the market and how they can economically recover from the loss by using Decision Tools, Decision Analysis, Economics and cost analysis and Product Design.

1 Introduction

The main objective of this project is to implement Decision Tools, Economic analysis, Product Design and Decision analysis in Amazon which is the 2^nd largest e-commerce website across the globe, to recover from the losses that they have incurred due to the failure of their cellular device in the Market. Critical thinking and numerous decisions had to be taken inorder to introduce the device in the market. Decision tools have been introduced tocompare the alternatives which Amazon had, inorder to recover from the losses. It is a software that takes the inputs based on the major decisions that need to be evaluated based on restrictions and constraints and provides us with a precision tree, which helps us to make the final decision. Decision analysis is introduced to analyze the differences between the decisions by implementing comparison charts. Economic analysis is introduced to support the decision taken in comparison with the other decisions with help of present worth and future worth analysis of each decision over a certain period of time. Product design has been introduced to identify the reason why the product failed in the market and how they can make a tweak on the device to attract the customers into buying it again. Using these analytical studies, they can eventually recover from the losses and pursue the challenge of being a prominent leader in cellular arena.

2 Approach

In order to introduce the Decision tools, major decisions are taken into consideration and the constraints leading to the decisions are evaluated. Then a precision tool software is used to develop an influence diagram of the different aspects and constraints and their effect on each other.

Recovery of incurred losses on Amazon’s Fire Phone Harvard Case Solution & Analysis

Based on this influence diagram, the precision software will provide a tree which will guide us to the most effective decision that can be made in the particular scenario. The software will give us just a suggestion and it is up to the company to make the final decision.

The costs of different options will be gathered and can be compared using the Future worth Analysis of each decision and how long it will take to recover from the losses.

A cost table has been made for the device to analyze the price of the phone and how it can be reduced, so, it can be affordable by themajority of buyers. Few modifications that can be made are studied and analyzed in order to make the phone efficient and attractive to the buyers.

An economic analysis of all the alternatives has been made to compare the costs and the time period for the recovery of the loss.

3 Methodology

A hierarchy diagram to depict the Amazon’s goal to increase company profits by introducing Fire Phone device.

Major decisions that have been made in this scenario are:

To launch the phone or not:

This is the initial and crucial decision made by Amazon as the chance of device being successful in the market is a 50-50 chance.

They could invest the same amount in various investments to get huge returns.

If they decide to develop the smartphone device which costs $650 and if it succeeds in the market, they will make $450 of profit per device. If it fails, they will face huge losses.

Influence Diagram for this decision:

Decision tree:

Making of the Phone:

Amazon’s Fire Phone is unique. They had specific hardware providers for all their digital devices. For the first generation Amazon Kindle eBook reader, they relied on Foxconn and for their Kindle Tablet device, they relied on ODM from Quanta.

However, for the First Generation Fire Phone device, they refused to use existing base designs and hardware as it will cost them a lot.

Coming to the software part of the phone, Amazon’s Fire phone uses the Fire OS, an operating system specially designed by Amazon and for Amazon products.

The initial decision had been made among three choices available. The choices being