Business 12th Edition by William Pride,Robert Hughes,Jack Kapoor

Exercise 3

When CEO Jeff Bezos founded the pioneering online retailer Amazon.com in 1995, his goal was to build "Earth's biggest bookstore." Amazon now rings up $48 billion in annual sales and offers "Earth's biggest selection" of merchandise, everything from cameras and clothing to lamps and luggage. What began as a virtual bookstore has become a multifaceted, multinational business serving 164 million consumers and business customers, thanks to the founder's visionary leadership and relentless focus on customer satisfaction.
Sitting around the conference table with his top managers, Bezos often leaves one chair empty to represent "the most important person in the room"-the customer. Although many CEO s keep a close eye on the earnings they must report to shareholders every three months, Bezos has always paid more attention to long-term customer needs than to short-term financial results. Amazon's strategic plans look ahead a decade or more, and cover innovations that take advantage of the company's technology strengths. "We are comfortable planting seeds and waiting for them to grow into trees," he says. Bezos and his executives have the patience and conviction to make far-reaching decisions about future investments and actions, watch how things unfold during implementation, and adjust the plans as needed while the world catches up.
The Kindle is a good example of how Amazon's strategic planning pays off. When electronic book readers were in their infancy, Bezos was convinced that Amazon could upend the market by making an easy-to-use device capable of downloading and displaying any book in one minute or less. Company engineers invested years (and millions of dollars) inventing the original Kindle, which immediately sold out when introduced in 2007. Since then, newer models with additional features and functionality, including the Kindle Fire, have attracted a huge wave of new customers as well as new "content creators"-authors who use the Kindle platform to publish their own books. Electronic books now outsell printed books, a development that has driven Borders and other book stores into bankruptcy while Amazon profits from the surge in digital downloads that its Kindle helped to stimulate.
To ensure that Amazon is doing what it should be doing to satisfy customers, management sets standards for hundreds of everyday activities and constantly measures actual performance. For example, it times how quickly its web pages load and finds ways to speed things up, because it has learned that even a splitsecond delay can cause customers to click away. The company maintains minimum inventory levels to avoid running out of merchandise, presorts packages to add to its shipping partners' efficiency, and tracks down the cause of any delivery delays so customers will know they can rely on Amazon's delivery promises. No wonder Amazon routinely comes out on top in customer-satisfaction surveys.
Today, the company's Web site serves as an online marketplace where individuals and businesses can sell their products, paying Amazon a small percentage every time they make a sale. Major corporations like Netflix pay for access to Amazon's sophisticated Internet software and data storage systems. Still, because Amazon's roots are in retailing, Bezos continues his habit of reading customers' letters to see what they like and what they don't like, seeking clues that will lead him to the next big opportunity
Questions
How does Amazon.com apply total quality management, and why?