Equity analysis report: Amazon.com, Inc. (AMZN)

EQUITY ANALYSIS REPORT: AMAZON.COM, INC (AMZN)
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EQUITY ANALYSIS REPORT: AMAZON.COM, INC (AMZN)
Amazon.com, Inc. is an online based company that sells anything and everything when it comes to the interest of the consumer. The store offers online solutions for all of the client’s defender supply-demand needs. The company is registered in the stock market with its stocks being called AMZN. In the year 2016, the organization had more than two hundred thousand employees and registered a growth in revenue for the second quarter of the year. A SWOT analysis incorporated into a ratio of analysis of the AMZN equity will be a good way to fully understand the stock and give all of the investors a picture of how safe their investments in Amazon.com, Inc. are at a time when accountability is highly encouraged. Focusing on the four aspects of SWOT (strengths, weaknesses, opportunities and threats) gives one a comprehensive look at the stocks and whether investing in them would be a worthwhile venture.
Strengths
In order to effectively determine the strength of a firm’s stocks, it is vital that several factors are looked at. When it comes to Amazon.com, Inc., the organization has numerous strengths that work in its favorCITATION EBe02 p 571 l 1033 (Bernroider, 2002, p. 571). The firm has a strong brand, a wide variety of products and earns the highest revenue of all industry players. The Amazon brand is a common brand in the United States.

It has also done very well in international markets becoming the go-to place in case an individual is looking for literally anything that can be sold. The firm allows for numerous third parties to sell using its platform. The site usually has a lot of traffic all year roundCITATION Rob14 p 76 l 1033 (Weigand, 2014, p. 76). Therefore, it becomes the ideal website for third-party sellers to use. This has been one of the cornerstones of Amazon’s performance when it comes to service delivery and performance.
A vital strength of Amazon is the fact that it has a loyal customer base and provides for the various needs of all of its clients. The amount of money spent in production and the amount returned by sales is high enough for the company to post positive results when it comes to the revenues. For instance, for the second quarter of 2015, the firm posted revenue increases of up to 20.2% despite the fact that profits fell by 347%.
Weaknesses
The firm enjoys many benefits when it comes to its sector of operation. The fact that it is doing well against all of its completion (who are all major contenders) is the testimony to the good management at AmazonCITATION Jam11 p 98 l 1033 (Valentine, 2011, p. 98). However, this is not to deny the fact that the firm still has weaknesses of its own. A major weakness of Amazon.com, Inc. is the easiness of imitation of the business model. The basic concept behind how the firm operates is simple. Provide products online for the consumers and let as many third parties participate in the buying and selling as possible. Therefore, the firm faces a lot of competition. When it comes to the stock itself, it is affected by the seasonalityCITATION DLe06 p 1094 l 1033 (D. Leigh, 2006, p. 1094). There are seasons when the sales will be extremely high due to the demand for products and seasons when sales will be low given the fact that consumers are broke. When other multinational companies have successfully moved into developing nations to expand a business, Amazon.com, Inc. has poor penetration in developing countries. In order to overcome this weakness, the company has to capitalize on its strengths and work harder at penetrating the developing nations using clever and effective strategiesCITATION Law09 p 85 l 1033 (Fine, 2009, p. 85).
Opportunities
Making the business environment safe for its consumers will work well for the interests of Amazon.com, Inc. The business has experienced a lot of success when it comes to the developed nations with the majority of consumers looking to buy products from the site. The company has done a good job in diversifying as much as possible so as to meet the varied needs and wants of its consumersCITATION Ben06 p 75 l 1033 (Graham, 2006, p. 75). One key step in making sure that transactions on the site are safe is by enhancing efforts to prevent the sale of counterfeit products on the site. A reliable name for the firm only translates to stronger stock and better numbers with regards to profits and revenue.
The developing nations are the new frontier for business men and women globally. A middle class of consumers is emerging in these regions that have a taste for Western products, and it is vital that Amazon.com, Inc. is not left behind while other key industry players strive to make their claim in these marketsCITATION SEJ03 p 802 l 1033 (S. E. Jackson, 2003, p. 802). Working towards better market penetration in developing countries will provide Amazon.com, Inc. with the revenue and profits boost that it badly needs at the moment.
Threats
There are numerous threats to Amazon.com, Inc. with regards to how it operates. The first and most dangerous threat is the imitation of its business model by the competition. As mentioned earlier, the business model used by Amazon.com, Inc. is a simple one. Its success is very much evident, and this has made it very viable for imitation by other industry players. This threat keeps the firm on its toes since it now has to ensure that it provides the service best so as to keep its existing clients from going over to the competition. Another threat that is being experienced by Amazon.com, Inc. is the great competition from large retail stores that have onlineCITATION Fra14 p 31 l 1033 (Rothaermel, 2014, p. 31). These stores tend to offer prices that are tempting even to loyal Amazon.com, Inc. consumers. Thus, Amazon.com, Inc. has to be on its best game when it comes to its pricing strategy and marketing endeavors. Cyber crime is a real threat at the moment. With hackers pulling heists where they take personal information of consumers from websites of retail firms, it is important that Amazon.com, Inc. ensures the highest security for its consumers at all times.
In conclusion, Amazon.com, Inc. has done a good job in providing a service that many people were in great need of. The organization has done well to ensure that the consumers have received good services and good products through them. The company has the advantage of being the biggest player in its field. Unfortunately, due to its simplicity, the firm’s business model is easily imitable making it easy for the firm to get competition from other industry players. In order to ensure that it is ahead of the game, the firm has to maximize on the opportunity of expanding to developing markets otherwise the threat of completion growing bigger than Amazon.com, Inc. will be real. There are a lot of factors that are in play in this situation. It all depends on the management.
References
BIBLIOGRAPHY l 1033 Bernroider, E., 2002. Factors in SWOT Analysis Applied to Micro, Small-to-Medium, and Large Software Enterprises: an Austrian Study. European management journal, 20(5), pp. 562-573.
D. Leigh, A. J. P., 2006. SWOT analysis. The Handbook of Human Performance Technology, pp. 1089-1108.
Fine, L. G., 2009. The SWOT Analysis: Using your Strength to Overcome Weaknesses, Using Opportunities to overcome Threats. Detroit, MI: CreateSpace Independent Publishing Platform.
Graham, B., 2006. The Intelligent Investor: The Definitive Book on Investing. New York, NY: HarperBusiness.
Rothaermel, F., 2014. Strategic Management: Concepts. New York, NY: McGraw-Hill Education.
S. E. Jackson, A. J. N. L. E., 2003. Recent research on team and organizational diversity: SWOT analysis and implications. Journal of Management, 29(6), pp. 801-830.
Valentine, J. J., 2011. Best Practices for Equity Research Analysts. New York, NY: McGraw-Hill Education.
Weigand, R., 2014. Applied Equity Analysis and Portfolio Management. New York, NY: Wiley.