Amazon.com A Step Ahead

Presented By:Ikram Ahmed Khan, Mohit Thakur, Jackie Kiarie, Spencer Masenda, Youngsam Kang

Amazon.com A Step Ahead

Company Overview

Mission, Vision & Values

Record Growth

Amazon facing claims and investigations due to their Transfer Pricing Strategy

Fulfilment Procedure

Books & E-BooksMovie, Music and GamesKindleElectronicsHome And GardenComputer And Office

Key Products

Amazons RevolutioneBooks & Kindle

>450 000 books available for download

Newspapers, magazines and blogs subscription

Amazon keeps 65% of the revenue from all eBook sales for Kindle

eBooks downloaded from Amazon not exclusive to Kindle

Kindle eBooks add 35% to a physical books sale on Amazon

Amazon reported 80% of eBook market"Our vision is to have every book ever printed, in any language, all available in tinder 60 seconds. Jeff Bezos, Amazon.com CEO

PESTEL FactorsKey pointRelevance to AmazonPoliticalGovernment regulations of e-commerce and other services.Laws and policies in different jurisdictions affecting trade and foreign investments.International policies impede Amazons plan for further expansion internationally.EconomicCurrency fluctuations can cause issues when selling multimedia over the internet since the company uses US dollarsAmazon holds cash equivalents and marketable securities primarily in different currencies. Therefore, if the U.S. Dollar strengthens compared to these currencies, when translated, may be materially less than expected and vice versaSocialIncrease in the internet growth rateAmazon have got an opportunity to increase their market shareTechnologicalInnovations and development of high-speed internet services (broadband) has increased usage of media applications Amazon as an online retailer is forced to surpass its competitors in terms of innovation.EnvironmentalGlobal WarmingAmazon offers cloud storage and cloud computing which can eliminate the need for hardware and storage devices for the general publicLegalNo uniform regulations governing e-commerce covering all the countriesAmazon should be aware of both the domestic and international laws

PESTEL Analysis

CategoryExample1online mass retailersEbay.com2Online specialized retailersApple.com, Dell.com. Staples.com3book retailers (As this is the main revenue source of amazon.cm)Barnes and Nobles, Half Price books4Brick and Mortar retailersWal-Mart, Sears 5E-book readers (As kindle is a main revenue generator for Amazon.com through both its own sales and induced e-book downloads)Kobo e-reader, Apple i-pad, Barnes and Nobles Cybook6Social buying sites Groupon, deal map

Amazon Inc being a multinational e-commerce company and due to its presence over various e-commerce categories have a lot of competitors in various categories

For example rottentomatoes.com is a competitor for IMDB.com and Google App Engine is a competitor for Amazon Web Services. These two in actual becomes competitor for Amazon Inc but not amazon.com

Here we are considering only the online retailing/retailing division of Amazon.com and have classified the competitors accordingly

Competitors of Amazon can be classified intoCompetitors

Porters 5 Forces Model

StrengthsCost leadership strategySuperior quality services and productsStrategic acquisitionsStrategic alliancesEfficient distribution chain and logisticsWeaknessesOnly online presenceSelling at zero marginsNegative publicityOpportunitiesOnline payment systemRelease more its own brand products and servicesIncrease services and product portfolio through acquisitionsOpen more online stores in other countriesPhysical presenceStraight-to-consumer modelThreatsOnline securityLawsuitsStrategic alliancesRegional low cost online retailers

SWOT Analysis

15

The Wall Street Journal announced Amazon would be launching its first physical retail store in January 2015. This store was to better service New York residents unable to take advantage of Amazon's delivery service. Amazon to Open First Brick-and-Mortar SiteThe New York City Location to Handle Same-Day-Delivery Inventory, Product Returns Updated Oct. 9, 2014 8:00 p.m. ET

Expansion

AMAZON.COM,INC.CASH FLOW STATEMENTSYear Ended December 31,Cash provided by or used in (in millions)201320122011CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD$8,084.00$5,269.00$3,777.00Operating activities$5,475.00$4,180.00$3,903.00Investing activities-$4,276.00-$3,595.00-$1,930.00Financing activities-$539.00$2,259.00-$482.00Foreign-currency effect on cash and cash equivalents-$86-$29$1Net increase (decrease) in cash and cash equivalents$574$2,815$1,492CASH AND CASH EQUIVALENTS, END OF PERIOD$8,658$8,084$5,269

Amazon Financials

AMAZON.COM,INC.CONSOLIDATED STATEMENTS OF OPERATIONSYear Ended December 31,(in millions)201320122011Net product sales$60,903$51,733$42,000Net services sales$13,549$9,360$6,077Total net sales$74,452$61,093$48,077Operating expenses:Cost of sales$54,181$45,971$37,288Fulfillment$8,585$6,419$4,576Marketing$3,133$2,408$1,630Technology and content$6,565$4,564$2,909General and administrative$1,129$896$658Other operating expense (income), net$114$159$154Total operating expenses$73,707$60,417$47,215Income from operations$745$676$862Total non-operating income (expense)-$239-$132$72Income before incomes taxes$506$544$934Povision for income taxes-$161-$428-$291Equity-method investment activity, net of tax-$71-$155-$12Net income (loss)$274-$39$631

Amazon Financial Statement

Financial Analysis

Financial Analysis

Financial Analysis

Profitability2012-132011-12Net Margin %1.311.11Asset Turnover (Average)2.182.05Return on Assets %2.860.75Return on Equity %8.633.06Return on Invested Capital %8.12.75

Dr. Robert Kaplan and Dr. David NortonBalance Scorecard

Strategic ObjectivesMeasuresTargets ActualFinancialMaximize shareholder wealthIncreased operating profitReduction in prices Increase share priceHigher Profit marginLowering down the publishing cost$4603%10%$307.281%4%CustomerFast Delivery Brand loyaltyUser Friendly websiteestablishing more distribution centres Customer revisitsIncreased customer ratings by Investments in site maintenance 3 days38%4.9200m5 days28.5%4.2154mInternal business processSpeed of processing ordersSecure online data processingReduce processing timeReduction in customer complaints2 hrs03 hrs5%Learning and growthHighly skilled staffInnovationTraining and employing high expertise staff Research and developmentNo.1- 108m2.26 bNo.1- 79m1.75 b

Balance Scorecard

Conclusion

Thank you!