popular online shop, Amazon

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All throughout the world, Amazon is a well-known online buying site. Beginning in 1995, it continued to grow in order to meet the needs of its customers. The Seattle-based company Amazon.com, usually known as Amazon, was founded by Jeff Bezos in 1994 and provides technology and cloud computing services in the United States. By revenues and market value, it is the top retailer in the world. Before expanding to additional markets like DVDs, Blu-rays, and video download/streaming services, it started off by selling books online. The company also manufactures electronic items, with the most popular models being the Kindle e-readers and Fire tablets. The company is also largely known for cloud computing services and is a leader in the field. Amazon is also involved in other businesses such as the sale of low-end products like USB cables under the name Amazon Basics.

Amazon has different sites for the countries it operates such as United States, the United Kingdom and Ireland, France, Canada, Germany, Australia, Brazil, Japan, China, India among other regions. In addition to that, Amazon also offers international shipping to certain countries for some of its products offers overseas shipping of its commodities to other states where it conducts its business. In 2016, Amazon included diverse languages of its sites such as in Dutch, Polish and Turkish versions that came into existence. In 2015, Amazon became the top company in US by market capitalization surpassing Walmart. What is more, it reached the fourth spot of the most valuable company

Vision

“Our vision, at Amazon, is to be Earth's most customer-centric company; to build a place where people can come to find and discover virtually anything they want to buy online."

Company Strategy

Several things show the success of Amazon, including its growth, competitive position and geographic scope.

Competitive position

Amazons biggest competitor is Alibaba Group and eBay. The three of them have the largest market shares of online shopping and are well known by people. But Amazon is in an advantageous position as Alibaba Group focuses more on China instead of the whole world, and the risk of shopping on eBay may be a bit higher than on Amazon due to the managing method.

Our businesses are changing at a fast rate and competition is increasing in different categories such as e-commerce services, web infrastructure and digital content among other fields that are part of our operations. Among our present and potential competitors are well-off with regards to resource availability, longer period in the industry, high number of clients and an advanced brand. They are able to get better terms and conditions from vendors, slightly better pricing models and prioritizing more resources towards development of technological infrastructure and aggressive marketing campaigns.

Competition may intensify as our competitors enter into business combinations or alliances with established companies in other market segments expand to become competitive with our business. Besides, new and enhanced technologies, including search, web, and infrastructure computing services, digital content, and electronic devices, may increase our competition. The Internet facilitates competitive entry and comparison shopping, and increased competition may reduce our sales and profits.

Balanced Scorecard

The balanced scorecard (BSC) is a strategy used as a management tool that can be used by executives to track undertaking of operations by the employees within their areas of supervision and to take a closer look at the consequences coming up from the matter.

. The company will be under the measurement of four aspects, they are the customer, internal, innovation and growth and financial, according to the balanced scorecard.

Customer

Amazon promises to sell the pre-order product at the lowest price while the other two competitors don't. It gives Amazon a significant advantage. The automatic refund system will function when Amazon found that the shopping experience of the customer is not up to their standard.

Amazon employs strategy that incorporates multiple processes in its e-commerce business. Amazon began by paying more attention to Business-to-Consumer relations and Business-to-Business relations with its suppliers. However, they later on progressed to include Customer-to-Business transactions realizing the vital role customers played in reviewing their products. As of now, it facilitates more ties with the clients by provision of the Amazon marketplace which plays the role of an intermediary to enhance clients’ transactions. The company allows people to use their platform to sell their products. Besides the affiliate program that allows anyone individual post links on the company’s platform and earn a commission on based on click-through sales, a program is in place that has the capability of coming up with an entire websites from scratch based on Amazon’s platform.

Customer relationship management (CRM)

Amazon has done a lot to keep its customer. It is giving out Amazon point for specific products and customers may use the position to pay next time. It may ensure the return of the customers because of the points they are holding. It will also send emails about the products that a customer has searched about and may be interested. The email will also update the client about the latest discount. There are some affiliate programs with Credit Card Company that allow customers to shop with the points of the credit card. It will also show the product a customer have seen before and some recommendations when accessing its home page.

Prime

Amazon now has prime two-day delivery that allows a minimum of one million to thirty million, included in the Sunday Delivery, and brought also the other feature of Free Same-Day Delivery on many customers around the various cities that it operates in the globe. They have also included music and photo storage, a Lending Library, and the capability of streaming films and TV.

Prime can now bring on board one-hour delivery of paramount subset of selection which came into existence a short while after conception of the idea. During the period, a small team came up with a customer-facing app. They got hold of allocation around a warehouse, decided the items to sell, stocked the products, recruited and brought into place new employees. They undertook the various phases of software development and launched it when the holidays were around the corner. Presently after its launch, the app is is serving members in more many cities all over the world. Prime Video allows exclusive airing of some of the most passionate storytellers. They require some of the most brilliant minds Jill Soloway and Jason Schwartzman, to take risks and push boundaries all with the sole purpose of realizing their dreams. Their series have earned over 120 nominations and won nearly 60 awards, including Golden Globe and other prestigious awards. Most of the stories aren’t given the chance to be viewed by many in the normal programming model. New stuff is being prepared for showcasing including major movies and series from creators like Jeremy Clarkson, and Kenneth Lonergan.

Third-Party Sellers

Amazon achieves the number of high sales witnessed due to the effort of third-party sellers who sell their products. Associates get a commission for referring customers who place links all over their websites and subsequently result to sales. Globally, Amazon has many affiliate programs. During 2014, the Affiliate Program were used by almost 1.2% subscribers of the site making it the second most popular advertising platform trailing Google Ads. It is frequently used by sites and non-profit organizations to enable people earn money from commission. Amazon reported millions of sellers on its sites during the period. Unlike other e-commerce sites, Amazon sellers aren’t required to maintain separate payment accounts since they the payments are the primary mandate of Amazon.

Associates can access the Amazon catalog on their websites using web services like the XML. A new affiliate product gives permission to associates to integrate their products as subsets using another website, or linked to another site. In June 2010, Amazon Seller Product Suggestions got launched to increase transparency by recommending products to third-party sellers on their sites. Products suggested are form the client’s browsing history.

Internal

Operating Expenses

Operating expenses is in place to clearly highlight the effect of stock-based compensation, which is all about non-cash programs not part of the operating plans and illustrates the financial performance. Furthermore, different from other stocks, the stock-based competition doesn’t get shown in other results and therefore is not part of the expenses in the segment presentation shown in the financial statements.

Controls and procedures involved during disclosures

Amazon conducted the necessary evaluations required by Securities Exchange Act of 1934 (the "1934 Act"), from the direction of senior executives and the top financial officer on the best ways to follow and manage the disclosure procedures evident in the definition of the Rule 13a-15(e) of the 1934 Act that was enacted in December 31, 2015. From the observations of the evaluation, senior management made the conclusion that the disclosure operations were within the set procedures December 31, and they were effective to provide reasonable clarifications on operations of the firm. That information that was supposed to me made public after submission was found under the 1934 Act. It was required that the details be recorded, processed, summarized, and reported within the time frames allowed by the SEC's rules. There was also the need to provide reasonable assurance information is aggregated and communicated to the top executives in the institution including our principal executive officer and chief financial officer, within the designated time required to enable arrival at proper and timely decisions that will enable efficient running of tasks.

Innovation and Growth

Amazons try their best to collect all the new products available in the market. They also try their best to improve customers shopping experience.

Employee training

In 2011, Amazon had 30,000 full-time employees in the USA alone and by the end of 2016 the number had almost tripled. The company employs over three hundred thousand employees across the globe in full- and part-time jobs. Amazon provides a sponsor up to 95% for an employer to take courses that are related to their business to attract an employer to see their role in Amazon as their career. On the other hand, they respect the manager that just see Amazon as a stepping stone and try their best to help them gain the new skills that are necessary for further development. It contributes to increased employer's productivity as they feel more secure and appreciated by the organization.

Amazon Services that are found in the Web

It’s just over ten years ago when AWS got launched in the U.S. Its initial service that it undertook was a simple storage service. Currently, AWS offers diverse services for computing and storage, analytics, Internet and enterprise applications. The zones are also across over thirty countries globally with 12 geographic regions worldwide and other areas. Among the places where the availability zone is present include Canada, China, India, the U.S., and the U.K. which is under preparation for the next year. AWS started began with startups, and currently is available to over one million clients from many industries such as Pinterest, Airbnb, GE, Enel, Capital One, McDonald's, and Time Inc. AWS is more big than bigger than Amazon.com and is growing at a very high rate which was not intended due to constant innovation that forms the backbone of the current turn of events. New features that came in place have made the growth rate increase by over 40% which was unprecedented and is commendable at the same time

Geographic scope

Amazon has 13 websites for different countries including China, Japan, India, France, Germany, Spain, Italy, UK, Canada, Brazil, Australia, Mexico, and the USA. An extensive trading network helps it attract customer with different needs.

New Products, Services, Technologies, and Geographic Regions Subjects Us to Additional Business, Legal, Financial, and Competitive Risks

Amazon may have limited or no experience at all in new market segments thereby making it unprecedented on whether the clients will embrace the changes. The offerings may bring about major challenges in the process and subject to claims if customers of these offerings experience disruptions or failures subsequently quality obstacles. Profitability may also lower compared to old activities, and we may not be successful in these newer activities to compensate for the investments made. If any of the above was to take place, the reputation could be adversely damaged limiting on growth and operating results.

Financial Perspective

Starting from 1995 in the US, Amazon sold books online. It finally becomes a global online shopping platform selling an extensive range of products and record over 107 billion sales (2015). The net sale has a growth of 20% when comparing with 2014's data.

Cost of sales

The cost of sales primarily is made up of purchasing of products, digital media content costs where the revenues are significantly better off including Prime Video and Prime Music subscriptions. Other services offered such as packaging, sortation and delivery related to equipment costs and outbound shipping costs, including transportation service. Shipping costs to are included in the inventory and known as cost of sales. There was increase in the cost of sales in dollars during the year 2013-2015 compared to other durations due to high shipping costs brought about by increased sales. The growth in 2014 was affected by growth of the digital offerings and Fire phone plus the inventory valuation and supplier commitment costs. The costs of operating the web service get classified as "Technology and content" meant to integrate both the internal technology and AWS to outside clients.

Foreign Exchange Risk

In 2015, the net sales from the overseas segment accounted made up almost a third of consolidated revenues. Net sales and other expenses were realized from internationally-focused websites and the primary Amazon websites. They are denoted in functional currencies of the state where the website is in use including Euros, Japanese Yen, and British Pounds. The aftermath of the operations related to other companies are exposed to foreign exchange rate fluctuations. After consolidation, the exchange rates of other foreign countries, net sales among other factors of consideration differ significantly deviating from expectations thereby recording significant gains or losses on the companies related and their balances. An example would be the outcome of fluctuations from foreign exchange in the year 2015, the foreign revenues dipped by almost $5.0 billion compared to the years before and the operations in the country.

There is presence of foreign exchange risk that can be compared to foreign cash, market securities also known as foreign bonds and cash equivalents. Based on the balance of foreign funds by December 31, 2015, $7.3 billion had assumed almost 10% change in foreign exchange thereby leading to a decline of about $730 million. All investments which are usually classified in the segment "available-for-sale" also got affected as a result of the available changes. The fluctuations are categorized under the segment "Accumulated other comprehensive loss," a different component that is used to take care of stockholders' equity in the organization.

There is the availability of foreign exchange risk that is related to our company balances which is denominated in various foreign currencies that are used for its identification. Relying on the other companies balances as of the period December 31, 2015, an assumption of 5% change to foreign exchange had led to the witnessing of loses to a tune of $190 million, $405 million, which was grouped in the category “Other income (expense), net.” “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Results of Operations—Effect of Foreign Exchange Rates.”

February 01, 2023
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Business Economics

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