Sunday, February 24, 2013

The Amazon World

Over the past week or two....a great deal of government man-hours have been put into looking at Amazon and how it works.  There's a general gut least expressed in media reports and interviews....that the German government isn't happy about way that Amazon works.

Working hand in hand with the government leadership....are journalists....who are simply journalists.  They aren't business graduates from some university....they usually are journalist graduates.  So they've taken to the Amazon story with some humble mistakes attached to their reporting.

Unlike business operations of sixty years, if you want to start any company and you've been through the MBA program and understand processes, then you have a business model.

You basically write a concept.  You develop the idea.  You have a few standards that are set in stone as how you operate the business, and cut corners.  By the time that you move into a've set your advertising into place, given a dozen people hand-outs to do every Saturday for a month or two, and devised specials to get the original crowd of devoted customers into accepting your operation.

Business models are the lifeblood of a business.  You can write a great plan, implement, and twelve months into the attempt....admit defeat.  There were simply variables that went beyond your model (local political figures uncooperative with your business, limited parking as growth started, advertising never achieving results, etc).  Most people consider these failed attempts as simply a lesson learned, find a job for a couple of years, regroup, and make another run five years later.  You learn from mistakes.

So you start to look at comments from German Federal Employment Agency's chief, Frank-Juergen Weise.  Herr Weise is an expert on employment and the ethics of such.  Has Herr Weise ever written a business model?  I doubt it.  From the internet, it appears most of his education background has been in economics and social sciences.

From the Die Welt interview,  you get the impression that Herr Weise would like to limit government regulations to only occasions that really demand a significant change.  The agency will readily admit that they are still looking into allegations against Amazon.  It may be months before they come to a clear conclusion.

The comments from journalists that these 'new' companies entering into Germany have only American managers?  Mostly all false.  What Amazon probably did do was bring some other European managers with background in the business model and put them through a German language class in a hurry.  Grammar checkers?  Oh my....that would be great, but typically German companies don't hire such people.  But German the Die Welt journalists....have the grammar checkers to ensure things are always written right.

So we finally to the Amazon business model.  It works primarily because your real profit season is early fall until after Christmas.  You need more employees for a four-month period.  For the rest of the year, you manage with a normal staff.

The old German model was that you had your regular staff simply go to longer hours for solely the month of December, and you did the best you could....without hiring any more employees.  If you couldn't react to larger-than-normal big deal.  You just accepted the fact that if the sale couldn't be made, it wasn't a big deal.

Amazon has a business model which says they bulk up to maximum strength.  They've done the research and know the right number of employees to have at critical times.  They can forecast it and have proven the bulk-up tactic works in every single case.  They can even go back and say the Christmas season of 2012 was a complete success....then turn to admit bringing in the Spanish workers might not have been smart, and the security team had issues.

In business, you admit mistakes, learn from them, and hope to never repeat them again.

So we turn to the journalists.

Journalists have no business models.  Oh, they will admit they know interview procedures, how to quote, how to write damning articles, or how to lay out facts when necessary.  Whether the newspaper or news team ever makes a not their business.  It's the job of the editor to count up subscriptions, advertisements, and eventually determine a profit margin.  Pay-raises only come....if you sustain a profit.  Better journalists only move up....if the paper can show income to sustain them.

The ARD and ZDF folks don't worry much about this.  They know the TV tax angle to this and have a business model related to that.  They can't lose....unless the public starts to get the politicians angry and hostile over TV taxes.

Business models are a nasty reality to the modern business world.  You can't survive without them anymore.  In the German business upsize or downsize at the right times, and squeeze every Euro out of what you make. more about a good business model, than a bad business model.

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