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How AI Will Change Strategy

The document discusses how AI will change Amazon's business strategy through a thought experiment involving 3 steps: 1) AI collects extensive customer data, 2) AI prediction accuracy improves to over 95%, allowing it to ship customers items it predicts they will want, and 3) This level of prediction forces Amazon to change its model from shopping to shipping, where it delivers items to customers before purchases. The document argues this new model would benefit Amazon by increasing customer loyalty and purchases. It concludes that companies must consider how rapidly AI could impact their strategies and develop contingency plans.

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ANVESHI SHARMA
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48 views12 pages

How AI Will Change Strategy

The document discusses how AI will change Amazon's business strategy through a thought experiment involving 3 steps: 1) AI collects extensive customer data, 2) AI prediction accuracy improves to over 95%, allowing it to ship customers items it predicts they will want, and 3) This level of prediction forces Amazon to change its model from shopping to shipping, where it delivers items to customers before purchases. The document argues this new model would benefit Amazon by increasing customer loyalty and purchases. It concludes that companies must consider how rapidly AI could impact their strategies and develop contingency plans.

Uploaded by

ANVESHI SHARMA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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How AI Will Change

Strategy
: A thought Experiment

Submitted by :
Group 12
Introduction
⬥ How AI will change strategy ?

⬥ AI is fundamentally a prediction
technology

⬥ The trend is upward

2
Amazon’s Current Model
⬥ Visit the website/app
⬥ Shop for items
⬥ Place them in “Cart”
⬥ Pay for it
⬥ Amazon will ship it

3
AI in Amazon’s Current Model
⬥ Recommendation engine
⬦ AI predicts the items that
might be bought by its
customers
⬦ Accuracy is only 5%
⬦ i.e. 1 in 20 items would
be purchased.

4
Thought Experiment: Amazon

01 02 03

Information Collection Prediction Improvement Major Change

5
Step 1: Information Collection
Amazon AI collects information about us through:
⬥ Searching and purchasing behavior
⬥ Data found online
⬥ Social Media
⬥ Offline like our shopping behavior at any Retail
Store

It collects data not only about what we buy, but when


we buy, where we buy, how we pay etc.
6
Step 2: Prediction Improvement
⬥ Amazon can increase its AI Prediction such that it
crosses a threshold which will force Amazon to
change its business model.

⬥ The prediction becomes so accurate that Amazon


ships you the product it predicts you will need
rather than wait for you to order them, this could
be done weekly
7
Step 3: Major Change
⬥ Amazon’s AI will make it profitable for Amazon to
change the business model from Shopping than
Shipping to Shipping than Shopping
⬥ Investing in infrastructure for hassle free return

8
Benefits for Amazon
⬥ Customers won’t purchase from competitors as
products are conveniently delivered to their home
even before they buy them.
⬥ It nudges customers to buy items that they only
considered but might not have gotten around to
purchase.
⬥ In both the above cases Amazon gains higher
share-of-wallet.
9
Key Insights from Reading
Eventually they have to
Impact of AI in
1 business has turned 3 develop new strategy for
their business or make
out to be crucial profound changes in their
existing model.

Today company’s have to Top leading companies like


2 invest more in AI , which
they expect to be profitable
4 amazon, GM are making
early investment
In future anticipating of future profits
& expansion.
1
0
Conclusion

⬥ Dilemma faced by strategists


⬥ How fast AI will affect their business
⬥ Develop a thesis about strategy options due
to implementation of AI

11
THANK
S!
Submitted By:
Group 12
Anveshi Sharma MBA/06/009
Cyriac Martin MBA/06/016
Harshitha DP MBA/06/020
Rahul G MBA/06/035
S Anirudh Balaji MBA/06/038

12

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