This paper is a discussion on Activity-based costing (ABC), one of the costing methodologies used in business. The methodology essentially entails assigning a cost to the various activities of an organization, which range from planning and production to quality control, logistics, and distribution (Kaplan & Anderson, 2007). It also entails determining the amount of time required to perform the activities (Kaplan & Anderson, 2004). The cost and time are then used as a basis for determining the price of the organization's products or services. If properly implemented, ABC can deliver significant benefits to an organization, especially with respect to business performance and competitive advantage (Cokins, 2001). Focusing on Amazon, this paper discusses the use of time-driven ABC in e-commerce activities. First, a brief background of the organization is provided. Next, attention is paid to how a time-driven ABC system can be implemented in the organization and the associated benefits on business performance. The paper then examines how the ABC system can create competitive advantage for the organization in the marketplace as well as the potential impact of the system on online services compared to services provided via traditional channels.Organizational Background
Amazon, an American multinational e-commerce and cloud computing firm, is the largest online retailer worldwide in terms of revenue and market capitalization. Operating out of its corporate headquarters in Seattle, Washington, the company has operations in several parts of the world including Canada, the UK, Germany, Netherlands, France, Italy, Australia, India, China, Brazil, and Mexico. The company serves tens of millions of customers, providing a broad variety of online services, including an internet marketplace, advertising, audio entertainment, educational programming, social cataloguing, as well as cloud computing. The online marketplace is the organization's major revenue earner. The website provides an e-platform for buyers and sellers to meet. Amazon offers thousands of products that can be purchased from the website, ranging from books and audio content to consumer electronics, clothing, fashion accessories, furniture, toys, video games, and household items. Founded in 1994 as an online bookstore, Amazon has become the world's largest player in the online retailing space. The company has extensively revolutionized the world of e-commerce.
Implementing ABC and Associated Benefits
Though the ABC method is traditionally...
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