Amazon Inc Strategic Audit Report

Weaknesses 7 Marketing 8 1. Strengths 8 2. Weaknesses 9 Amazon’s Customer’s Operations 9 Operational Strengths of Amazon 9 Human Resources 10 Information Systems 10 Conclusions and Recommendations 11 Conclusion 11 Recommendation 11 Appendices 12 Appendix 1: The Net Sales (in millions except per share data), ("AMZN Income Statement," 2018) 12 Appendix 2: Quarterly Financial Statement (UNAUDITED), ("AMZN Income Statement," 2018) 12 References 13 Management Summary Amazon is an American electronic and commerce company that has majored in information technology and cloud computing. The company has its headquarters housed in Seattle, Washington and was founded by Jeff Bezonz in 5th July 1994. The company is the largest internet retailer in the world based on revenue generation. Bezos has been with Amazon from day one and his leadership and expertise make him an invaluable asset to the company. Amazon would not be Amazon without him.

This is being done in an effort to keep down costs to afford the company the ability to keep prices for the company down. Amazon had no roadmap to follow when they first started out, and they had to develop much of their software on their own. Here are just some of the patents Amazon has: a patent ranking results of searches using past similar searches and what was the result is chosen, electronic gift certificates, partial credit card number hiding, suggest refinements on searches using previous searches, etc. With the current share price in the $175 range, it is safe to say that each director has a significant stake in Amazon and its long-term performance. Board members bring with them diverse backgrounds which will help them contribute to successful strategic direction.

The board is constituted of members who have backgrounds in Wall Street financing, publishing, academia, technology, and even the chair of the Smithsonian Institute in Washington, ("About Amazon," 2018). A number of senior leaders, led by CEO Jeff Bezos, have a long tenure with the company. These leaders are paid mostly with stock and are heavily involved in the strategic management process. If done successfully and managed carefully it will help Amazon achieve this objective; however, if not managed properly this push toward maximizing profitability could lead the firm away from their customer-centric culture and away from their goals of convenience and selection for the customer. For the purposes of this paper, we will focus on competitors in two of their major industries: online retailing and e-book readers.

In the online retail industry, the current major competitor to Amazon is E-bay. com. E-bay is an online marketplace connecting buyers and sellers. So while this is great for consumers, Amazon has to be concerned in engaging in an intense price war with the only product it manufactures. Having no roadmap to follow for an online retailer, Amazon had to create their own way and develop their own systems and best practices, which they have been able to patent and make it harder for competitors to achieve the same amount of success that Amazon has. This paper will go into more detail on the patents Amazon has later in the paper. Substitutes Another more interesting alternative to Amazon is using an internet search engine to find products to buy.

A search engine has the ability to not only find products to purchase, but it is also a portal to everything else the internet has to offer. Scarce or Unique Resources The unique resource Amazon has is their customer database. Amazon has been tracking customers’ habits for a long time and has accumulated an enormous amount of information, (Horngren & Harrison, 2008). Amazon has tracked and logged the buying and searching habits of their 59 million customers has resulted in a large amount of customer data being stored. Amazon’s two largest databases accounting for over 42 terabytes of data… in 2005! No newer numbers have been released, but it could have only gone up from the 42tbs of data they did have, ("Amazon - Investor Relations - Q4 2017 Financial Results," 2018).

This data allows Amazon to market their product offerings to the right consumers and makes finding products on their website incredibly easy. • The cash and investment balance was $125 million which has made it easier for the company to afford strategic flexibility. Liquidity and Capital Resources The primary source for liquidity is operations and cash equivalents as well as marketable security balance. This has a value of 19. 8 billion, 26. 0 billion and 31. Another major Amazon dependency is on the holiday season. Approximately 39% of 2009 sales came during the fourth quarter. If people stopped celebrating the holidays, Amazon’s sales figures could be her, (Horngren & Harrison, 2008)t. Having a business affected by seasonality is a potential risk since Amazon needs to stock up more product than the other seasons or else risk losing out on potential sales, but if the stock up too much, they risk having to move inventory for less than they anticipated.

This leads to another dependence Amazon has: it depends on other people to make products. Analysts predict that Amazon will continue to grow a high rate, doubling its earnings in the next five years, with significant growth showing over the past five. Amazon’s revenues are expected to more than triple by 2011. Marketing 1. Strengths Amazon’s main marketing strength is its heavy online presence. It gained such a presence through a business strategy that includes constant expansion into new market areas, including online television and music. In addition, the customer database is used for promotional activities such as email campaigns. Alongside its ventures into a digital video download service and selling music mp3’s, Amazon has acquired and begun other companies and developed business services.

While expensive, it is the authors’ opinion that these acquisitions and other added services do in fact enhance Amazon’s market position vis-à‐vis its competitors. Another way Amazon attracts customers and expands its product offerings is through third-party vendors. It sees these vendors as customers because Amazon earns a certain percentage of everything they sell through its website, (Horngren & Harrison, 2008). On the first page of his letter within the 2009 annual report, CEO Jeff Bezos points out that there is increasing membership worldwide. The program does decrease profit over time, although the expense associated with the program is not recorded within “marketing expenses. ” It is the authors’ opinion of this strategic audit that customers will buy more as a result of joining Amazon Prime, hence raising overall revenue.

Therefore, this strategy matches that of the growth strategy for increased market share. Weaknesses Amazon main marketing weakness is increased marketing costs. It was recently widely reported that Amazon made available a book is written for the express purpose of offering advice to pedophiles. Initially, amidst harsh protest, company representatives explained that they are not in the business of censoring media. That statement worsened the situation, fueling cries of boycotts through social media. Finally, two weeks after making the book available, management pulled the title from its offerings online. The question arose regarding how they choose which books to make available to sell, but few details emerged, ("Amazon 2017 Annual Report," 2018). Amazon also has a similar customer service system, allowing customers to modify and track orders under an account section online and provides an almost immediate callback to customers experiencing problems after providing a telephone number on the website.

Amazon’s strength in supply chain management comes from the extensive network of suppliers it has across the U. S. and the globe. Each company it has acquired brings to the table outstanding strengths in one of four areas: 1) Customer service, 2) Inventory management, 3) Supply chain management and/or 4) Superior product offerings. Full‐time employees can invest into Amazon stock and are fully vested anywhere between 2 and 5 years, with 149 million shares currently set aside specifically for future issuance to employees as of the end of the fiscal year 2009, ("Amazon 2017 Annual Report," 2018). Executive management is clear that compensation for “talented employees” be in stock rather than in cash. Thus giving them the incentive to bring value to the company. No information could be found about any other recent layoffs – evidence that Amazon aims to keep its employees for sales growth and increasing market share.