Amazon Final Report

AMAZON FINAL REPORT
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Executive Summary
The report herein outlines the establishment and rise of the Amazon as a company; it is the world’s largest online retailer. During the growth phase, Amazon had to overcome lots of professional accounting, public relations, and management challenges, among many others (Kastantin, 1988, p.145). Also, the report addresses the background information of the company.
Despite lots of challenges facing young businesses, research shows that Amazon thrived against all the odds to survive, hence becoming the world’s number one online retailer. Statistics shows that since the emergence of the company in 1994 until 2015, it has accommodated a whopping three hundred and four million active customer accounts. Also, the firm has around fifty-four million prime members (Schneider, 2017). Each premium member pays 99 dollars annually to access Amazon’s premium privileges such as movies, videos, and music streaming among others. The company attracts millions of customers who make purchases either using computers or mobile devices. In 2014, Amazon’s marketplace facilitated the sale of more than two billion products.
The report shows that Amazon ranks highly among the online retailers. Also, the report indicates that the considerable firm is growing bigger. From the Amazon case study, we can learn about the e-business strategy issues and how to tackle them effectively, the policies, procedures, operating systems, best practices and continuous improvement tactics worth implementing for an online retailer or an e-commerce company.

Also, we can learn about diversification strategies and the analysis of multi-business corporations. Lastly, the report analyses the corporate culture issues and how to handle them relating to the world’s largest online retailer and e-commerce platform. Other than identifying significant accounting, management, public relations and different organizational resources implications, the reports seek to recommend meaningful solutions, relating them to the case study of Amazon.com.
The report may have had some limitations. For instance, limited time to look into the case study and analyze all data it entails. Also, some statistics may lack accuracy since the giant online retailer hardly reveals some of its sensitive figures, for instance, number of users among others. Lastly, the available statistics regarding Amazon.com may be obsolete, since the company is still on the rise and has dynamic prospects.

Background of Amazon
Jeff Bezos founded the giant e-commerce firm in 1994. However, the company launched Amazon.com, its website in 1995. Bezos is the CEO of Amazon.com to date. Research shows that the initial name of the retailer was to be “Cadabra.” Currently, the online retailer’s headquarters is in Seattle, Washington. Initially, Amazon.com started as an online bookstore but later diversified to include video games, electronics, clothing, DVDs, and music. Three years into the online business, the retailer offered its initial public offer of stock at eighteen dollars per share. The fact that Amazon did not intend to make a profit for the first five years somehow scared away investors. At that time, Bezos focused on growing the company fast at the expense of profitability. In 1999, five years after establishment, Jeff Bezos received an honor as “Person of the Year” by the Time magazine. The Time Magazine credited the founder for successfully popularizing online shopping through Amazon.com (Hall, 2017).
Amazon became profitable for the first time in the first quarter of 2001, with revenue of over one billion dollars and a profit of five million US dollars. However, small the gain might seem, it fulfilled Bezos initial plan. The online retailer underwent a rapid expansion after opening branches in Germany and the United Kingdom. Bezos, aimed at offering Amazon’s products to anyone and anywhere in the globe, which attracted online shoppers. The retailer’s services helped it acquire customer loyalty and it resulted in profitability. Other than retailing, Bezos termed Amazon as a technology company. Therefore, in 2002, the CEO launched Amazon Web Services, a service that initially aimed at offering data on internet traffic patterns, website popularity among other statistics for marketers and developers. Later in 2006, the company established a portfolio seeking to rent computer processing power. The collection was an expansion of AWS and was called Elastic Compute Cloud (EC2). Amazon.com established Simple Storage Service (S3) in 2006 (the same year). The S3 sought to rent out data storage over the internet (Schneider, 2017).
The two technologies S3 and EC2 enabled companies to rent computing resources, thus proving that they did not need own resources. For instance, Netflix, a competitor to Amazon.com uses these technologies for video streaming services. In 2007, the firm stormed the e-book market by selling its Kindle e-readers. Later in 2011, the company introduced the Kindle Fire, which was a low-cost tablet. The gadget constituted 50 percent of all tablets sold with the Android operating system. Initially, book publishers were happy with the online retailer since it helped them boost their sales. However, there arose a conflict between the giant retailer and the publishers pegging to the price of e-books. Some publishers threatened to withdraw their books from Amazon, for instance, the Macmillan Books. The retailer established AmazonEncore, which was the company’s first publishing line. The publishing line offered a platform where individuals would publish their e-books. Amazon.com is currently among the major publishers globally (Schneider, 2017).
Today, Amazon.com emphasizes on listening and taking care of its customers’ needs thus rendering it customer-centric and dubbing it as “customer-obsessed.” The company aims at seizing the era of technological revolution to maximize its profitability. According to a recent survey, the giant online retailer had almost 269,000 employees globally. In a nutshell, Amazon.com is not only an enormous online retailer but also a hub for engineers, software developers, technical program managers as well as user interface experts. Amazon has top notch technology characterized by its massive databases and high processing power facilities.
Analysis of problems facing Amazon
Although Amazon.com is the world’s leading online retailer and one of the biggest publishers today, there are lots of challenges the company has faced. Strangely, the issues still exist at Amazon today. Some of the general difficulties facing Amazon.com is intense competition and management complications as a result of its rapid expansion. Other significant issues facing the giant online retailer are company resources and capabilities, global or multinational strategy implications and E-business strategy issues. Diversification strategies and the development of a firm multi-business corporation is another challenge facing the company. Lastly, corporate culture, organizational structure, financial conditioning, and analysis are other issues facing amazon.com. This report seeks to give a well-researched and vivid study concerning the topics mentioned above, that limit the giant online retailer, Technology Company and publisher Amazon.com (Graham, 2017).
Industry and Competitive Analysis
The Porter’s Five Forces analysis also known as industry analysis is a must have for business strategists. The studies seek to determine how a business is attractive to both consumers and investors. Besides the industry competitive analysis enhances the formulation of strategies and a better understanding of the company’s competitive position in the respective industry through close observation of profit and revenue margins. The Porter’s Five Forces are industry rivalry, threats of the substitute, bargaining power of buyers, bargaining power of the suppliers and ease of entry into the business (Mars, 2014). Besides the industry competitive analysis (ICA) enlightens strategies and investors on the overall performance of a company (Graham, 2017). In our case study, Amazon.com may have overlooked the Industry competitive analysis during the first years of establishment. ICA aims to determine the profitability of a company about other related businesses. However, Jeff Bezos may have given the cold shoulder to this critical tool of business development. In the first five years, the online retailer aimed at “getting big fast” at the expense of profitability (Hall, 2017).
Research shows that Amazon.com was not profitable for the first five years, which compromised its position as an online retailer in the business world. For a business to establish and thrive in the harsh business world, it ought to have excellent competitive strategies. For instance, by lowering prices to attract more consumers and creating unique products to avoid the threat of substitution. However, Bezos did not have a plan in mind, which made the establishment of Amazon.com an uphill battle for the first five years. Investors feared to venture into the company since it did not have any profitable gains.
In a nutshell, Jeff Bezos idea of not adhering to proper industry and competitive analysis may have delayed the emergence of Amazon.com as the retailing giant from 1994 to 1999. In another scenario, Jeff Bezos failed to implement The Porter’s Five Forces analysis, which is a vital growth ingredient of a business (Greenspan, 2017). Amazon.com dictated the price of e-books from external publishers thus depriving the bargaining power of the suppliers (Kline, 2017). This rift between book publishers and the company was a limiting factor to the profitability of Amazon.com through selling e-books. Macmillan Book Company withdrew its books from Amazon.com which was a big blow to the e-commerce company. The issues mentioned above are some of the significant industry and competitive analysis problems that faced Amazon.com since its years of growth to emergence as a giant e-commerce company.
Company Resources and Capabilities
Amazon.com has lots of resources all over the world. Besides, the company has many competencies and skills. However, the company’s resources and competencies have some flows that tend to pull the company down. Some of the tangible resources possessed by amazon.com are storage warehouses, employees, and distribution centers. One of the significant flaws with the substantial resources Amazon.com maintains is that since the company is majorly online based, these assets are not of much significance. Therefore, they do not play a significant role in the competency of the online retailer. Under the intangible resources, Amazon.com has its renowned reputation and its brand image. Besides, the company has lots of clients and customers. Lastly, the technical skills of the company’s employees are also one Amazon’s intangible resource. The major setback with the uncertain riches is that they are limited in some places (Graham, 2017). For instance, in China where the giant online retailer faces fierce competition from Alibaba.com
The core competencies of Amazon are organizational capabilities. The giant e-commerce firm offers a vast selection of products online. Also, it provides superior IT resources and systems such as storage and processing power. These services serve as the core competency of the online retailer. The company’s highly skilled employees ensure that the firm has more negotiation power from its suppliers. Besides, the marketers in Amazon.com are well aware of the supply market thus somehow limits the bargaining power of supplies for optimum profitability. Another capability of the e-commerce company is how it prioritizes the customer’s needs. The firm aims at the satisfaction of every customer’s requirements. For instance, the company uses a customer’s history to suggest future purchases. Lastly, the cost-effective logistics system in Amazon.com is a core competency of the online retailer.
In the pursuit of customer satisfaction, the company faces a significant drawback in the company resources and capabilities sector. For instance, the company has millions of Prime members who pay ninety-nine US dollars per year, to receive two-day shipping for any item purchased online. Amazon.com has over sixty million active Prime Members in the United States, which sums to around fifty percent of its customers. Serving the millions of customers is the principal obligation of the retailer. Despite the increasing number of Prime Members, the retailer works in conjunction with a limited number of shipping companies. The fewer the number of shipping companies, the more bargaining power they have according to Porter’s Five Forces. Therefore, the shipping firms may overcharge the e-commerce company for their services. In a nutshell, the online retailer faces a significant threat of incurring enormous shipping costs for the Prime Members (Kline, 2017). The high shipping costs may jeopardize the overall performance of the company, and as a result, limit customer satisfaction. Therefore, Amazon’s company resources and competencies may be affected negatively by shipping costs and a limited number of shipping companies.
Diversification Strategies and the Development of a Firm Multi-business Corporation
Initially, Amazon started as a bookstore that operated from Bezos garage. Later, the founder implemented diversification strategies and introduced other products, for instance, DVDs, video games and streaming services. Amazon entails both related and unrelated diversification (Hall, 2017). Introduction of new classes in a business class calls for extra expenditure. A multi-business corporation is a daunting task to establish and run smoothly. Therefore, financial management is a core aspect of the diversification of a company. In our case study, the firm has successfully adopted diversification and setting a multi-business corporation. For instance, Amazon is an online retailer, a bookseller, publisher and also an IT company that rents out database systems, storage, and computer processing power among other resources. The company rents out some of its video streaming services to rivals such as Netflix. Therefore, that’s a clear indication of excellent diversification strategies to develop the business from just bookselling to a renowned IT firm.
However, in our case study, the giant online retailer was faced with a big problem during its startup years, as it tried to diversify. The company introduced some retailer classes such as pets.com and living.com (Bowman, 2016). The firm established these categories at a tender age, at the expense of developing the brand image of the company. These classes were one of Bezos’ strategies of getting big fast. However, the company ended up losing a lot of money. Therefore, for the first five years of establishment, Amazon.com may have miscalculated its diversification strategies thus incurred loses (Bowman, 2016).
Suggestions and Recommendations
Professional accounting, public relations problems, management, and diversification strategies are some of the major setbacks facing businesses in the modern business world. The major hit businesses by the outlined setbacks are online businesses, for instance, online retailers like Amazon.com. Described below are some of the recommendations to issues facing the giant online retailer in the cruel business world.
Improved Quality of Products and Services
The online retailer can enhance the quality of services they offer to their consumers by upgrading the payment methods. Besides, the company can offer discounted prices on products to old and loyal customers. By so doing, the company can retain and attract more customers. This recommendation seeks to fulfill industry and competitive analysis through a strict observance to Porter’s Five Forces analysis. Another proposal is the exploration of new markets and future diversification. Amazon.com ought to observe the developing countries which have active upcoming markets, as one of the primary recommendations. For instance, China and India are some of the significant emerging economies and markets. Supposing that Amazon establishes warehouses and distribution centers in these countries, the online retailer is likely to benefit from economy of scale since there are no fierce competitors. Also, the e-commerce company can introduce other products and services to maximize profitability (Hall, 2017).
Starting Production of Major Products
Lastly, the online retailer heavily depends on third party suppliers and shipping companies. One of the primary recommendations is that the e-commerce company starts its production line. The company can eliminate the over dependency on eternal suppliers thus avoiding unexpected losses. The firm can also lay out proper plans to prevent unforeseen setbacks, for instance, the one incurred after the flop of the Amazon Fire phone. The company can also establish its own shipping company to significantly lower shipping charges and even improve services offered to the Prime Members. Besides, the business can grow the customer-computer interaction through more attractive suggestions.
Plans for my Career
I have acquired lots of skills from school, for instance, professional accounting, marketing, and management skills. Besides, I have learned lessons from case studies and iconic business persons. For example, Jeff Bezos strategy when establishing amazon.com was a good learning point (Hall, 2017). Learning from Jeff Bezos, the founder of the giant online retailer and my role model, I plan to start my own company after school. I plan to start an automotive garage, to sell motor vehicle spare parts and to offer maintenance. I will write a business proposal through which I will attract investors to my company. Also, I will provide my products and services at a reduced price which will help me acquire competitive advantage amongst other related businesses. After a successive establishment of the company, I intend to buy help from skilled professionals such as marketers, analyzers, and strategists before embarking on diversification of the business. I plan to diversify the company by the introduction of shipping and hauling services. Later the company will rise and start a production line where the firm will set up car manufacturing plant in a major city. At that stage, I will acquire skills from professionals to set up strategies that will make the business a multinational corporation. In a nutshell, setting up a multinational automotive company is my primary plan for my future career.
References
Bowman, J. (2016). The 3 Biggest Risks Facing Amazon.com. [online] The Motley Fool. Available at: https://www.fool.com/investing/2016/10/31/the-3-biggest-risks-facing-amazoncom.aspx [Accessed 11 Jan. 2018].
Graham, J. (2017). Amazon’s Biggest Challenge. [online] HuffPost. Available at: https://www.huffingtonpost.com/john-graham/amazons-biggest-challenge_b_8062784.html [Accessed 11 Jan. 2018].
Greenspan, R. (2017). Amazon.com Inc. Five Forces Analysis & Recommendations (Porter’s Model) – Panmore Institute. [online] Panmore Institute. Available at: http://panmore.com/amazon-com-inc-five-forces-analysis-recommendations-porters-model [Accessed 11 Jan. 2018].
Hall, M. (2017). Amazon.com | History & Facts. [online] Encyclopedia Britannica. Available at: https://www.britannica.com/topic/Amazoncom [Accessed 11 Jan. 2018].
Kastantin, J. (1988). Professional accounting practice management. Lansing: Quorum Books, p.145.
Kline, D. (2017). This Is What Amazon Worries About. [online] The Motley Fool. Available at: https://www.fool.com/investing/2017/05/24/this-is-what-amazon-worries-about.aspx [Accessed 11 Jan. 2018].
Mars (2014). Industry Analysis | Porter’s Five Forces | Competition. [online] MaRS. Available at: https://www.marsdd.com/mars-library/industry-analysis-and-competition-using-porters-five-forces/ [Accessed 11 Jan. 2018].
Schneider, L. (2017). Understanding Amazon.com’s History and Corporate Culture. [online] The Balance. Available at: https://www.thebalance.com/amazon-com-company-research-2071316 [Accessed 11 Jan. 2018].