Group Presentation about Amazon simulating an annual report in front of share holders (European University, MBA Term 2-2013, Strategic Management)

1. Seattle - Feb 26, 2013
Annual Meeting
Stella Khaikina Irina Burmistrova Umer Razi Krishna Raditya Nils Niederheide

2. Annual Meeting 2013
• Business Mission
• Business Model
• History / Milestones
• Operating Business
1. Company Analysis
Company Market Strategy Future Conclusion Q&A

3. Annual Meeting 2013
1.1 History / Milestones
Company Market Strategy Future Conclusion Q&A

4. Annual Meeting 2013
1.2 Business Vision
We seek to be Earth’s most
customer-centric company
for four primary customer sets:
consumers, sellers, enterprises, and
content creators.
Company Market Strategy Future Conclusion Q&A

5. Annual Meeting 2013
1.3 Business Model
Company Market Strategy Future Conclusion Q&A

6. Annual Meeting 2013
Online Shop
Kindle Device
Music, Video,
E-Books, Software
Web Services
(Cloud Computing)
B2C B2C B2C & B2B
1.3 Business Model
Electronics &
General Merchandise
Media Others
Company Market Strategy Future Conclusion Q&A

7. Annual Meeting 2013
1.3 Business Model
Electronics &
General Merchandise
Media Others
34% CAGR 12% CAGR 59% CAGR
32% 4%63%
Company Market Strategy Future Conclusion Q&A

8. Annual Meeting 2013
1.4 Operating Business
Company Market Strategy Future Conclusion Q&A

9. Annual Meeting 2013
1.4 Operating Business
Company Market Strategy Future Conclusion Q&A
Share $
$266.84
(25$February)

10. Annual Meeting 2013
• Market Conditions
• Competition
• Positioning
• Strategy
2. Market Analysis
Company Market Strategy Future Conclusion Q&A

11. Annual Meeting 2013
2.1 E-Commerce
Market Analysis
Company Market Strategy Future Conclusion Q&A

12. Annual Meeting 2013
Holiday Online Shopping Trend
(Nov – Dec 2012), USA
2.1 E-Commerce
Market Analysis
Company Market Strategy Future Conclusion Q&A

13. Annual Meeting 2013
% Composition of RegionalVisitors
ComScore (2011)
2.1 E-Commerce
Competitors
0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 %
14,9 %
35,4 %
34,6 %
83,4 %
32 %
4,5 %
26,7 %
31,8 %
46,9 %
8,9 %
29,6 %
5,3 %
41,1 %
24,1 %
11,7 %
0,7 %
24,9 %
85,7 %
8,7 %
4,5 %
4,0 %
0,7 %
8,0 %
2,5 %
8,6 %
4,2 %
2,8 %
6,4 %
5,6 %
2,0 %
Total Internet
Amazon Sites
eBay
Walmart
Apple.com
Alibaba.com
North America Europe Asia Pacific MEA Latin America
Company Market Strategy Future Conclusion Q&A

14. Annual Meeting 2013
2.1 E-Commerce
Competitors

15. Annual Meeting 2013
2.1 E-Commerce
Performance
High%
Compe++on%
for%Market%
Share%
Faster%Thinking%
Faster%Response%
Time%
Faster%Decision:
Making%
Faster%
Development%
Company Market Strategy Future Conclusion Q&A

16. Annual Meeting 2013
2.2 Media
Market Analysis
Company Market Strategy Future Conclusion Q&A

17. Annual Meeting 2013
2.2 Media
Company Market Strategy Future Conclusion Q&A
Market Analysis

18. Annual Meeting 2013
• Amazon compete with
Netflix in content space
• E.g. Digital video bundled
with amazon membership
• Just for kids vs digital video
amazon membership
• Offers prime subscriber $79 per year
• Shares of Netflix tumbled by 6 percent
2.2 Media
Competitors
Company Market Strategy Future Conclusion Q&A

19. Annual Meeting 2013
• Apple vs. Amazon
(music, eBooks & videos)
• Amazon drops eBook prices
to match apple prices
• E.g. James Rollins bloodlines
• It costs $10.94 in kindler store
• iTunes cost at $9.99
• Few hours same price at both stores
(kindle store & iTunes)
2.2 Media
Competitors
Company Market Strategy Future Conclusion Q&A

20. Annual Meeting 2013
2.3 Other Services
Company Market Strategy Future Conclusion Q&A

21. Annual Meeting 2013
• Fast growing Industry
• Intensive Battle
• Market share & Loyalty
• Cost leadership
• Expertise / Knowledge
2.3 Other Services
Company Market Strategy Future Conclusion Q&A

22. Annual Meeting 2013
2.3 Other Services
Market Analysis
Company Market Strategy Future Conclusion Q&A
$250 bn

23. Annual Meeting 2013
• Amazon.com is one of AWS's biggest users
2.3 Other Services
70% MS
4%
5%
Competitors
Company Market Strategy Future Conclusion Q&A

24. Annual Meeting 2013
• Price advantage
• Advanced infrastructure & Ease of scaling operations
• Part of an integrated suite of cloud-based products
2.3 Other Services
Competitors
Company Market Strategy Future Conclusion Q&A

25. Annual Meeting 2013
2.4 Market Analysis
Conclusion
E&M: 2
Media: 3
AWS: 0
E&M: 5
Media: 5
AWS: 5
E&M: 4
Media: 5
AWS: 5
E&M: 5
Media: 5
AWS: 5
E&M: 16/4 = 4
Media: 18/4 = 4,5
AWS: 15/4 = 3,75
High competition!!!
Company Market Strategy Future Conclusion Q&A

26. Annual Meeting 2013
• Corporate Positioning
Dimensions for Harris' Annual Reputation Poll
2.4 Market Analysis
Conclusion
Company Market Strategy Future Conclusion Q&A

27. Annual Meeting 2013
3. Strategy
Cost Leadership
Integration
Economy of Scale
Inter-Relationships
Capacity Utilization Time
Company Market Strategy Future Conclusion Q&A

28. Annual Meeting 2013
3. Strategy
Company Market Strategy Future Conclusion Q&A

29. Annual Meeting 2013
3. Strategy
Horizontal
Vertical
Company Market Strategy Future Conclusion Q&A
Portfolio Extension & Acquisitions
Production / Service Provider
Kindle (Own Devices) & AWS (B2B Services)

30. Annual Meeting 2013
3. Strategy
Horizontal
Vertical
Company Market Strategy Future Conclusion Q&A
Ecosystem

31. Annual Meeting 2013
Internet /Cloud
3. Strategy
Apps
E-Books
Music
Marketplace
Company Market Strategy Future Conclusion Q&A

32. Annual Meeting 2013
• Device Orientation
• Consumer Culture
• Differentiation
• OS Business
• B2B Orientation
• Differentiation
• Software & Information
• Innovative Culture
• Differentiation
• Ecosystem Competitors
3. Strategy
Company Market Strategy Future Conclusion Q&A

33. Annual Meeting 2013
• Recommendations
• Data Support
4. Future Strategies
Company Market Strategy Future Conclusion Q&A

34. Annual Meeting 2013
4. Future Strategies
Company Market Strategy Future Conclusion Q&A

35. Annual Meeting 2013
4. Future Strategies
Company Market Strategy Future Conclusion Q&A

36. Annual Meeting 2013
4. Future Strategies
• Cause Analysis by Segment
• Sales by Segment Contributor 2011 vs 2012
Million DollarMillion Dollar World Wide ContributionWorld Wide Contribution Growth
North America
- Media
- Electronic & General
Merchandise
- Other Service
International
- Media
- Electronic & General
Merchandise
- Other Service
2011 2012 2011 2012 2011 - 20122011 2012 2011 2012 2011 - 2012
7.959,00 9.189,00 16,55% 15,04% 15,45%
17.315,00 23.273,00 36,02% 38,09% 34,41%
1.431,00 2.351,00 2,98% 3,85% 64,29%
9.820,00 10.753,00 20,43% 17,60% 9,50%
11.397,00 15.355,00 23,71% 25,13% 34,73%
155 172 0,32% 0,28% 10,97%
Fantastic
Growth !
Highly
Dependent
on E&GM
Source:Amazon Financial Report Q4 2011 and 2012
Company Market Strategy Future Conclusion Q&A

37. Annual Meeting 2013
4. Future Strategies
Strategic
Goals
Opportunity Short Term Long Term
North
America
Operation
Excellent &
Service
Innovation
Growth Sales
64.29% from
“Other”
Segment
Optimized the
sales revenue
from “Media”
Segment
Optimized the
revenue from
Cloud Service &
AWS
Inter-
national
Cost Efficient &
re-design cost of
sales
Electronic &
General
merchandise is the
second biggest WW
Sales Revenue
contributor 25.13%
of WW Sales
Revenue
Optimized the
sales revenue
from “Media”
Segment
Optimized the
revenue from
Cloud Service &
AWS
Company Market Strategy Future Conclusion Q&A

38. Annual Meeting 2013
Media
Contributor
Music
E-Book
Movie
Market
Composition
Market
Composition
Market
Growth
(%)
Amazon
Market
Share
Source
2012 2017
Market
Growth
(%)
Amazon
Market
Share
Source
46% 40% 15% 16%
Ovum Global
Analyst,
www.hyperbot.com
3% 24% 70% 56%
Forrestor Research,
www.seekingalpha.o
m
50% 36% 35,2% 22%
AccuStream
Research,
www.wmctv.com
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

39. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

40. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

41. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

42. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

43. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

44. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

45. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

46. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

47. Annual Meeting 2013
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

48. Annual Meeting 2013
Q 2 - 2013
Upgrading the iOS Apps
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

49. Annual Meeting 2013
Million
Dollar
Growth YTD
2013
Market
Growth
North
America
International
11.486,25 25,00% 12,14%
12.365,95 15,00% 13,16%
Optimized sales
revenue from
“Media” Segment
Market
Action /
How
Schedule
Target
Sales Rev
4.1 Future Strategy
Sales Revenue (Short-term)
Company Market Strategy Future Conclusion Q&A

50. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
PaaS is a category of Cloud Computing Service that provide a Computing
Platform and a Solution Stack as a service.
Market Share
Company Market Strategy Future Conclusion Q&A

51. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
PaaS is a category of Cloud Computing Service that provide a Computing
Platform and a Solution Stack as a service.
Market Share
Company Market Strategy Future Conclusion Q&A

52. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
PLATFORM
HARDWARE + SOFTWARE
?
Market Share
Company Market Strategy Future Conclusion Q&A

53. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
Market Share
Company Market Strategy Future Conclusion Q&A

54. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
HOW ?
Market Share
Company Market Strategy Future Conclusion Q&A

55. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
Q 3 - 2 0 1 3
development in progress
Market Share
Company Market Strategy Future Conclusion Q&A

56. Annual Meeting 2013
Optimized the
revenue from
Cloud Service & AWS
Market
Action /
How
Schedule
Target
Market
Share
4.1 Future Strategy
20 %
of the market value
Market Share
Company Market Strategy Future Conclusion Q&A

57. Annual Meeting 2013
HR RELATED
STRATEGY
(Embedded Amazon
Value to Employee)
Why
Figure
Benefit
4.2 Future Strategy
Easy to move around
among the industry
Internal Efficiency
Company Market Strategy Future Conclusion Q&A

58. Annual Meeting 2013
Increase the Operating Cost
Unstable Innovation Creation
HR RELATED
STRATEGY
(Embedded Amazon
Value to Employee)
Why
Figure
Benefit
4.2 Future Strategy
Internal Efficiency
Company Market Strategy Future Conclusion Q&A

59. Annual Meeting 2013
Increase the Operating Cost
Unstable Innovation Creation
Compared by
Annual-Salary
Employee Level
30% - 50% Entry Level
150% Middle Level
400% Specialized / High Level
HR RELATED
STRATEGY
(Embedded Amazon
Value to Employee)
Why
Figure
Benefit
4.2 Future Strategy
Internal Efficiency
Company Market Strategy Future Conclusion Q&A

60. Annual Meeting 2013
HR RELATED
STRATEGY
(Embedded Amazon
Value to Employee)
Why
Figure
Benefit
4.2 Future Strategy
Internal Efficiency
Company Market Strategy Future Conclusion Q&A

61. Annual Meeting 2013
Strengthen
AMAZON ECOSYSTEM
HR RELATED
STRATEGY
(Embedded Amazon
Value to Employee)
Why
Figure
Benefit
4.2 Future Strategy
Internal Efficiency
Company Market Strategy Future Conclusion Q&A

62. Annual Meeting 2013
5. Conclusion
Company Market Strategy Future Conclusion Q&A

63. Annual Meeting 2013
Integration
New Cloud Services
5. Conclusion
2013
Company Market Strategy Future Conclusion Q&A
Short-TermView
Optimization & International
Strengthen Int. Market Position
Integration
Patent for “secondary market
for digital objects”

64. Annual Meeting 2013
5. Conclusion
Company Market Strategy Future Conclusion Q&A
Short-TermView
Operating Profit
Kindle
Ecosystem
2013

65. Annual Meeting 2013
5. Conclusion
Company Market Strategy Future Conclusion Q&A
Short-TermView
Operating Profit
Kindle
Ecosystem
2013

66. Annual Meeting 2013
5. Conclusion
Company Market Strategy Future Conclusion Q&A
Long-TermView
20...
• Digital Data vs.
Physical Products
Trends
• New Market
Opportunities
• Products - Services
Internet /Cloud
Apps
E-Books
Music
Marketplace
Prod./
Serv.
Tech.
Market

67. Annual Meeting 2013
5. Conclusion
Company Market Strategy Future Conclusion Q&A
Why invest in
market share?

68. Annual Meeting 2013
5. Conclusion
Company Market Strategy Future Conclusion Q&A

69. Annual Meeting 2013
Company Market Strategy Future Conclusion Q&A
Thank You!