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Amazon is a leading online super store and has become the largest internet company in
the United States of America. Amazon has revolutionized online retail by making it a convenient
shopping experience and by establishing themselves as an industry leader in online enterprises.
Amazon has also developed products to expand their range of services in regards to
entertainment. Amazon also formulated a vision statement for the future that they feel will
continue to progress their business as well as a mission statement, to guide them on a day to day
basis. Amazon has also embraced its corporate social responsibility as it has provided disaster
relief and made changes to benefit the environment to show that the company truly does care
about the world and its loyal customers. Overall, Amazon is an impressive company that is
excelling as an online retailer and electronics producer, planning for success in the future and is
embracing its corporate social responsibility.
In 1994 Jeff Bezos left Wall Street to pursue a business plan that would develop into
Amazon.com. On July 5, 1994 Amazon was launched. Its original headquarters where located in
Bellevue, Washington. Amazon is currently headquartered in Seattle, Washington. Originally
Amazon focused on becoming an online bookstore. Amazon has expanded immeasurably since
its beginnings in the mid-1990s to becoming an online superstore that sells a multitude of
products. Amazon has expanded by offering DVDs, CDs, books, video games, electronics,
apparel, furniture, appliances, beauty products, clothing, artwork, collectables, food, toys and
automotive parts, just to name a few. (Amazon) Amazon has also begun to develop its own
products such as the Amazon Kindle e-book readers, Kindle Fire tablets, Fire TV, Fire Phone as
well as streaming video and cloud computing services. The products have been growing in
popularity and are furthering Amazon as a versatile consumer electronics producer. Next,
Amazon has a grand plan for present day and the future.
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Amazon is currently an industry leader in online business and has a mission to progress
as they have lofty goals for the present and future. Amazon’s mission statement is, “We seek to
be Earth’s most customer-centric company for four primary customer sets: consumers, sellers,
enterprisers and content creators.” (Mission Statement of Amazon). Amazon is definitely a
customer-centric company, and they actually identify four specific customer types that they
service. Consumers that buy the products, sellers that Amazon buys the products from are
extremely important as well as enterprisers or business owners who provide many of their
products and content creators who are working on the Kindle products that Amazon produces
independently. Amazon also has a vision statement for the future that reads, “Our vision is to be
earth’s most customer-centric company: to build a place where people can come to find and
discover anything they might want to buy online.” (Mission Statement of Amazon). Amazon has
a bold vision statement that they will likely accomplish as they are known for aggressive
expansion. It seems like Amazon really does have almost everything that a consumer may want
to buy online and the yearly development of this company will make this a reality sooner than
later. Next, Amazon’s financial report shows how the business is operated.
By taking a look at Amazon’s annual revenues over the past 5 years, one can see that the
numbers have continued to progress considerably throughout the years. In 2009, Amazon’s
revenue was 24.51 billion dollars. This number has increased every year steadily in which the
annual revenue in 2013 was 74.45 billion dollars. This is a significant jump, and it illustrates that
Amazon has been focusing on increasing its sales every year. When considering revenue, it is
also important to consider how much money the company is profiting off of these extraordinary
revenue numbers. The net income in 2013 was 247 million dollars which is a high number but
not in comparison to the annual revenue which was 74.45 billion dollars. This is a weakness that
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Amazon needs to focus on fixing. They are making a lot of money in sales but are not profiting
significantly. Amazon had a bigger problem in 2012 when its annual profit was actually a loss of
over 37 million dollars. This means that Amazon was focusing more on getting sales, instead of
actually making money off of these sales. Amazon has struggled with this problem over the years
and is still trying to fix it. The profit margins need to be increased if they are going to be
competitive in the future, because another company will likely rise and not face the same kind of
problems. High volume and market share are not enough for Amazon to rely on in the
unpredictable financial future of the business world. Next, Amazon is taking many steps to keep
their main competition at bay.
Amazon does have competition but most of it is relatively indirect, due to the versatility
of the industry. Barnes and Noble bookstore and Ebay.com are the two apparent competitors.
Companies like Overstock.com and QVC could be a problem for Amazon in the future and as
the business continues to diversify, it will also compete against companies like Netflix and
Apple. One thing that Amazon has done to handle competition is to create strategic partnerships
and initiate strategic acquisitions. In October 2011 Amazon partnered with DC Comics for
exclusive digital rights to popular comics, which has led to such comics being removed form
Barnes and Noble. This not only helped increase traffic to Amazon, but it also eliminated Barnes
and Noble from that market, by creating an exclusive deal. In November 2013 Amazon partnered
with USPS to begin delivering on Sundays. It is being implemented slowly as it is primarily
operational in large cities only. This is an extraordinary opportunity for Amazon to diversify
itself from the competition, as well as increase the efficiency at which its products can be
delivered. Amazon has decided to acquire companies like Twitch, Zappos, Double Helix Games,
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Goodreads, and Woot to increase their online presence by using these websites to draw more
customers to Amazon.
In regards to Amazon’s Corporate Governance policies, I consulted the annual report and
viewed the leadership of Amazon. Jeff Bezos is the Chief Executive Officer, President and
Chairman of the board. Bezos is not on the Nominating committee. There are 3 members on the
Nominating and Corporate Governance Committee. With Mr. Bezos being the Chairman of the
board, it may be seen as a conflict of interest. Amazon has done a good job with remaining
objective in their corporate governance policies.
Amazon serves primarily as an online retailer and product producer, which means that
there are a lot of environmental factors to consider. The remote environment features an
extremely important area which is technology. Amazon produces technology that needs to be
continually improved to perform and compete well against its competitors. Amazon also has to
deal with sociocultural differences as they are expanding into foreign markets. An Economic
force could be an upward or downward trend in the value of currency or the unemployment rate,
which could mean more or less customers which could cause a wide array of issues. Planning is
needed to handle these situations.
Then the industrial environment also has a large impact. Amazon did have a rivalry with
Barnes and Nobles even though currently they are not fighting in the same space. Amazon has
taken a lot of Barnes and Nobles business and has forced them into a form of retrenchment.
Another interesting note is that since Amazon has left its initial focus of selling books, it has
entered other space and taken on even more competition. Power of suppliers and consumers are
another colossal concern for Amazon. Since Amazon is an online retailer, they heavily depend
on other companies’ products as well as their own. The power of customers is also huge since
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Amazon will buy the products it wants to sell ahead of time and overstock them, so customers
are needed to purchase them. Amazon does have to use caution while entering and exiting
markets as they like to expand to new markets and new product areas.
The operating environment analyses the competitive position of the company which is
interesting. Amazon has hurt all of its competitors over the years by entering their industry and
taking their business. EBay, Blockbuster, Barnes and Noble, Netflix, Sears, Best Buy,
Overstock.com and many more companies have been negatively impacted by Amazons market
share in their industry. Amazon has done a fantastic job with its corporate responsibility policies
and has tried to provide its employees with excellent jobs. This quote is directly from Amazon, it
reads, “Focus on hiring and retaining versatile and talented employees, and weight their
compensation to significant stock ownership rather than cash.” They are very innovative and are
always looking for ways to be more efficient, while pleasing employees. Amazon also has been
looking out for their stakeholders interests. One issue for Amazon is profitability, since they
make an insane amount of money in revenue but in multiple years have reported a loss of
millions of dollars. It’s a large concern and stakeholders are not pleased. In regard to this issue
Amazon states, “Make bold investment decisions in light of long-term leadership considerations
rather than short-term profitability considerations.” Shares in the company do continue to grow
in value as Amazon thrives.
SWOT Analysis displays the strengths, weaknesses, opportunities and threats of a
business. Amazon’s strengths are its strategic acquisitions and partnerships, cost leadership and
differentiation methods, customer base, reliability, superior logistics and distribution systems. On
the other side some weaknesses are negative publicity, loss of its initial strategic advantage, free
shipping implications, only online and poor profit margins. The opportunities are online payment
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system innovation, amazon brand name products, overstocking products, entering other product
markets, foreign land markets and Sunday deliveries. The weaknesses are inventory risk, identity
theft and hacking, internet safety concerns, aggressive pricing strategies, lawsuits from
publishers, competition, failure in foreign markets, foreign exchange rates, and seasonality of
business.
Amazon is also very active in regard to its corporate social responsibility. According to
Amazon, “At Amazon, we're constantly looking for ways to further reduce our environmental
impact. Online shopping is inherently more environmentally friendly than traditional retailing.
The efficiencies of online shopping result in a greener shopping experience than traditional
retailing.”(Amazon.com). This statement illustrates that Amazon is truly interested in the
environment. Amazon is also implementing a “Frustration-Free” Packaging initiative which will
make it easier for customers to liberate products from their packages as it will be easier to open.
It will be 100% recyclable and will sometimes involve products being shipped in their own
package without an extra box. This is a great idea as Amazon gets to save money on all of the
packing materials and labor by sending products in their original packages and it simultaneously
saving the customer the hassle and time of removing the product from the package as well as it
being great for the environment by conserving resources. Amazon.com/Green lists the best green
products on the website and is rated by customers. Since donating 6.9 million dollars to relief
funds on 9/11/01, Amazon has donated over 32 million dollars to disaster relief worldwide.
These points illustrate Amazon’s active role as a socially responsible corporation.
In conclusion, Amazon is an impressive corporation that is excelling as an online retailer
and electronics producer, planning for success in the future and is embracing its corporate social
responsibility. Amazon is managed well by CEO Jeff Bezos, as can be seen through its strategic
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partnerships and acquisitions, market share, aggressive growth strategy and contributions to the
community and environment. Amazon is a successful American made business that has a lot of
room for improvement and a bright future.
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Amazon Sales
Year Sales in Billions $
2009 24.51
2010 34.2
2011 48.08
2012 61.09
2013 74.45
2013 Annual Report
Revenue 74.45 Billion
Operating Income 745 Million
Net Income 247 Million
Total Assets 40.15 Billion
Total Equity 9.74 Billion
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Works Cited
Alchin, Linda A. "Amazon." Amazon. N.p., n.d. Web. 03 Feb. 2015.
"Amazon Inc." Yahoo! Finance. N.p., n.d. Web. 02 Feb. 2015.
"Amazon: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & More."
Amazon: Online Shopping for Electronics, Apparel, Computers, Books, DVDs & More. N.p., n.d.
Web. 02 Feb. 2015.
Amazon 2013 Annual Report
Jurevicius, Ovidijus C. "Mission Statement of Amazon." Amazon Mission Statement 2013. N.p.,
9 Feb. 2013. Web. 03 Feb. 2015.
