This document contains an agenda, history, SWOT analysis, and PEST analysis for Amazon. It then provides two potential solutions for Amazon - using drones for deliveries and expanding Amazon Web Services (AWS). For each solution, it outlines pros/cons, implementation strategies, financial projections, and challenges. The document concludes with questions.

1. Ecem Akyildiz, Samuel Lee, Izzy Ouellette, Dillon Scott

2. Agenda
● History
● SWOT Analysis
● PEST Analysis
● 2 Solutions
● Conclusion

3. “ Amazon has the unique ability to launch and run entirely
new types of businesses while simultaneously extracting
value from existing businesses. Amazon’s journey forward
will likely be marked by a series of transformations, as it
continues to pursue its vision unafraid of white space,
business model innovation, or renewal.”

4. HISTORY
1979 -
1995 -
1999 -
2005 -
2013 -

5. Amazon Acquisitions and Investments

6. SWOT Analysis for Amazon

9. Problems
●
●

10. Competition
Google self-driving car (develop technology, not sell car)
Caterpillar develop autonomous vehicles for mining
UPS “UPS invests more in technology than any other company in the delivery
business, and we’re always planning for the future”
FedEx creating aircraft to carry cargo

11. Milestones in U.S. State AV Regulation

12. Solution - Drones
● 5 year plan to increase operating profit
● Continue lobbying at current prices for drone legalization
● Use Nevada and Florida as models
● Break-even point from lobbying reached between 2016 and 2017

13. PEST Drone Analysis
Political - Need more U.S. State AV Regulation (currently only Nevada, Florida, &
Michigan allow AVs)
Economic - Requires heavy investment in Lobbying for AV Regulation ($3.4 billion)
- Increase in R&D expenses ($1.73 billion)
- Increase in Marketing expense
Social - Consumers are wary of this new technology
- Loss of jobs
Technological -Still developing new technology, nothing like this has been done
before

14. Pros
● Cost savings compared to other
methods
● Quicker delivery times
● Less reliance on other companies
for deliveries
● Expected increase in sales
Cons
● Won’t be fully accepted for years
● Limited range
● Costly lobbying
● Increase in marketing costs

15. Implementation Strategy
1. Maintain constant lobbying efforts
2. Use the two states which already
legalized drones as model and test
platform
3. Perfect marketing within these states
4. As more states legalize drones,
produce more drones to go along with
demand

16. Challenges
● Competition delivery companies using drones at a cheaper cost
● Developing improved drones to travel further and hold more weight
● Animals as well as other destructive obstacles
● Future laws further regulating drones

17. Fees for Deliveries

18. Drone Revenues and Expenses Forecasts
Years 2014 2015 2016 2017 2018
Drone Revenue $3,192,320 $17,557,760 $28,730,880 $39,904,000 $52,673,280
Expenses $1,461,685 $8,039,267 $13,155,165 $18,271,062 $24,117,802
Lobbying Expenses $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
Drone Income $730,635 $8,518,493 $14,575,715 $20,632,938 $27,555,478
Total 5 Year Earnings
before Tax $72,013,258

21. Advertising Year 1 Year 2 Year 3 Year 4 Year 5
Internet advertising
campaign #1 $1,250,000 $1,000,000 $600,000 $600,000 $300,000
Outdoor advertising
campaign #1 $550,000 $375,000 250,000 $250,000 $0
Tv advertising campaign
#1 $750,000 $600,000 $500,000 $500,000 $500,000
Newspaper advertising
campaign #1 $50,000 $50,000 $0 $10,000 $10,000
Internet advertising
campaign #2 $1,250,000 $1,000,000 $600,000 $600,000 $300,000
Outdoor advertising
campaign #2 $550,000 $275,000 $150,000 $150,000 $0
Tv advertising campaign
#2 $750,000 $600,000 $500,000 $500,000 $500,000
Newspaper advertising
campaign #2 $50,000 $25,000 $0 $10,000 $10,000
PR activities $350,000 $150,000 $150,000 $150,000 $150,000
Total $5,550,000 $4,075,000 $2,750,000 $2,770,000 $1,770,000

22. Solution - Amazon Web Services(AWS)
● IT Infrastructure Service-Cloud Computing
● Pay as you go model
● Offers Broad Functionality on a Global Scale
● Reliable Data Management
● Emphasis on developers

23. Pros
● Large Industry Growth
● Expand Customer Base
● Available Capital
● Long term profitability is high
● market leader
● Usage of amazon’s existing data
centers
Cons
● Untested market
● Require large investment in fixed
capital asset
● Short term profitability is low due
to large capital investments

24. Current Infrastructure of AWS

25. Data Centers
Expand Data Centers to
Increase Data storage
and throughput
Necessary to keep up with
increasing demand

26. Implementation Strategy
Year 1 Create a basic version of AWS and offer as freeware
Develop and implement the new infrastructure for AWS
Start expanding Data centers
Year 2 Based on demand, invest in expanding data centers
Year 3 Continue to expand data centers
Refine platform offering based on user feedback
Year 4 Continue the expansion of data centers based on demand
If the expansion of AWS is not profitable, consider liquidating data centers to an IT-competitor such as azure
Year 5 Depending on the increasing demand of AWS, continue the expansion of data centers

27. Challenges
● Strong competition in PaaS offerings
● Risk losing large investments in Fixed Capital Assets should demand
not be as expected
● Risk of losing customers with basic needs to the free package of AWS

28. Projection for AWS
AWS Expansion 2013 2014 2015 2016 2017 2018
Rev from AWS $3,108,000,000 $3,418,800,000 $3,760,680,000 $4,136,748,000 $4,550,422,800 $5,005,465,080
Operating
expenses $2,435,000,000 $2,735,040,000 $3,008,544,000 $3,309,398,400 $3,640,338,240 $4,004,372,064
Expansion of Data
centers $0 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000
Earnings Before
Income Tax $673,000,000 $583,760,000 $652,136,000 $727,349,600 $810,084,560 $901,093,016

30. Projected Income Statement
Years Current 2014 2015 2016 2017 2018
Sales Revenue
AWS Revenue
Operations Expense
Operations Profit
Other Income
Interest Expense
Taxes
Long Term Debt
Expense
Net Income

31. Any Questions?

32. Appendix I
Number of total packages shipped 232,000,000
86% of items under 5 pounds 199,520,000
20% of customers within 10 mile
radius 39,904,000
2 trips per package 79,808,000
Number of drones needed 9,138
5 year cost per drone $4,000
Cost of total drones needed 36,550,492
Trips for drones Per Year 79,808,000
Deliveries per drone per year 8,736
Number of drones needed 9,138
Costs Per Drone Number of Drones

33. Appendix II

34. Appendix III
With Drones Cost of Drones
Total Products Sold 232,000,000 232,000,000
# Packages 199,520,000 199,520,000
86% of items sold (under 5lbs) 20% 20%
% Live within a 10 mile radius of city center 39,904,000 39,904,000
Target Population’s cost $2.00 $0.18
Revenue / Cost of Delivery $79,808,000 $7,182,720
Total Revenue $72,625,280

35. Appendix IV
Ratios 2013 2014 2015 2016 2017 2018
Fixed Asset
Turnover Ratio 679.99% 704.71% 704.15% 709.92% 722.09% 744.72%
Gross profit
Margin 0.37% 0.74% 0.85% 1.48% 2.24% 3.62%