Final Exam S2020 PDF

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Introduction Amazon’s physical presence in Australia began in December 2017 with the establishment of a ‘Fulfillment Centre’ in Melbourne. At present, Amazon Australia has two additional centres in Sydney and Perth (Meldner, 2020). In order to determine whether Canberra or Sydney is the more suitable location for Amazon’s proposed R&D facility and strategic alliance with a University institution, the following essay will conduct a PESTEL analysis of the two locations, a VRIO analysis, determine the ideal University partner, and provide recommendations. Business Culture In terms of organisational culture, Amazon is very performance-driven. The company explicitly notes seven core values for employees: customer obsession, invent and simplify, ownership – which identifies that business success is a shared responsibility, insist on the highest standards, frugality, earn trust, and deliver results (Seller Nexus, 2018). Amazon Australia employee reviews collected from Glassdoor, with specific note to the Melbourne and Sydney locations, have expressed a mostly positive workplace environment that catered to flexibility and innovation, with the main issues regarding limited scope for employees (Glassdoor, 2021). Accordingly, Amazon must consider a location and university that shares similar values in order to further share similar business contexts and strategic goals. For instance, values of innovation and creativity must be at the forefront, especially with regard to the progressive understandings of AI technology. PESTEL Analysis (Note: The following analysis will be focused on Australia, yet will also share differentiating points between Canberra and Sydney in order to better understand the suitability of the recommended location) Political In terms of taxation changes, Amazon would be aware of Australia’s tax rate of 30% since the organisation has an aggregated turnover greater than $50 million (Australian Government. Australian Taxation Office, 2020), considering the organisation has already established fulfillment facilities. Australian political leaders have also shown their support for AI advancements and its potential within environment, safety, and healthcare aspects (Australian Government. Department of Industry, Science, Energy & Resources, 2020). Economic As of 2019, Australia has a GDP of 1.397 trillion USD (2019) (WorldBank, 2021). Like most countries, the unemployment rate has been affected by COVID-19. However, in the month of January 2021, the unemployment rate has decreased from 6.6% to 6.4% (Gailberger, 2021), which is an indicator that the population is developing the capacity to spend more. The City of Sydney’s Gross Regional Product in 2019 was $130.1 billion, whereas Canberra Region's Gross Regional Product was $10.3 billion (.idCommunity, 2021). This would be a factor to the distinctly smaller population in Canberra in comparison to Sydney. Comparatively, the Australian Capital Territory has the lowest rate of unemployment rates, reporting 4.4% in January 2021 whilst New South Wales reported 6% unemployed (Gailberger, 2021). Canberra’s overall quality of life has also been rated slightly higher than Sydney on NUMBEO’s Quality of Life Index (NUMBEO, 2021).

Social There is growing concern amongst society for AI ethics and regulations, and Lewis (2019) discusses how Australians are alarmed by the automation of decisions and processes. The lack of transparent information of AI structures and potential purposes could disturb society as they are unable to observe how these advancements serve their best interest. Amazon should be considerate of these concerns and be openly communicative with stakeholders. Technological Australia is ranked in the top third of most innovative countries in the Bloomberg Innovation Index 2021, ranking nineteenth of sixty countries (Jamrisko et. al, 2021). The significance of R&D in Australia is evident in the Research and Development (R&D) Tax Incentive established by the government in order to promote industry investments (Australian Government. Department of Industry, Science, Energy & Resources, 2021). The significance of technology in Sydney can be depicted through the city’s plans to develop Australia’s largest technology hub (Stonehouse, 2020). It also holds 35% of Australia’s start-up businesses (Weisfeld, 2017). Comparatively, Canberra has developed its presence in the technology industry with its recent testing capabilities. As reported by Latimer (2018), the city conducted one of the largest trials of a “virtual power plant made from residential solar battery systems in Australia” (para. 13). Environmental Consumer awareness of the environmental footprint of business activity is increasingly common in society, and Australians have attempted to combat this issue through various initiatives, such as the City Of Sydney’s vision ‘Sustainable Sydney 2030’ and Canberra’s not-for-profit organisation ‘Canberra Environment Sydney’. With increased external speculation, Amazon must be wary of the known carbon footprint of AI work, particularly with the need to have cooling data centers (Griffin, 2020). Legal All Australian R&D is regulated by legislation in the ‘Industry Research and Development Regulations 2011’, such as criteria and conditions for registration of research service provider. To exemplify, a condition is that “the research service provider has a management structure that is appropriate for the research service provider to manage the provision of services in relation to R&D activities on a day-to-day basis” (Australian Government. Federal Register of Legislation – 3.02(2) (e), 2021). VRIO Analysis Please refer to Appendix A. The VRIO Analysis depicts significant consideration of Amazon’s already established brand, resources and capabilities. As mentioned in the ‘Imitability’ section of the table, Amazon would be at the forefront of demonstrating AI capabilities within the retail industry. SWOT Analysis Please refer to Appendix B.

The SWOT Analysis demonstrates potential methods for Amazon to capitalise on rising concerns and opportunities within the AI community in Australia. Comparison of Universities Universities in Australia share common vision values of innovation, entrepreneurship, community engagement and social justice, and excellence in both students and departments. In a sense, both Amazon and Australian universities share a high regard for ‘customer obsession’, measured in the achieved capabilities of students. To elaborate, both the University of Technology, Sydney and the Australian National University, Canberra mention original and confident “thinkers” (students), which directly links to Amazon’s focus on innovation. Whilst Sydney has more options in terms of the number of universities accessible, being the base city for 6 universities in comparison to Canberra’s 2, Canberra’s Australian National University ranked first for the Australian Universities Artificial Intelligence and Image Processing ERA research ranking (University Rankings, 2020), which directly aligns to Amazon’s AI project plan. In addition, both of Canberra’s university ranked within Times Higher Education (2020) Australian University Rankings 2021, whilst only 3 of Sydney’s offerings had reached Top 10. Notably, Australia’s largest AI research facility is identified at UTS with its launch of the Australian Artificial Intelligence Institute (AAII) (UTS, 2020). Recommendation Therefore, with consideration to the above analyses, it is recommended that Amazon establish the R&D facility in Sydney in order to gain more visibility and traction, and strategically align with the University of Technology, Sydney, through the AAII in order to mutually enhance resources and capabilities. As relative invisibility is not possible for an organisation on the scale of Amazon, the organisation should be as transparent and visible as possible with the community to increase engagement. This would be most ideal in Sydney due to the high population and volume of businesses who are involved in the tech-space. In addition, Amazon has an already established fulfillment centre in Sydney, and the close proximity could ease the sharing of resources, equipment, HR training crossovers (which links to ‘innovation diffusion’), engagement, and potentially testing of AI systems within the warehouse. The idea to strategically align with a university capitalises on the recommendation of ‘open innovation’. This would be most profitable for Amazon by collaborating with the University of Technology Sydney, who heavily promote innovation and have already established a large AI facility that the company can share resources, equipment, and data with.

Appendix Appendix A – VRIO Analysis

Appendix B – SWOT Analysis...