Write the 2 strategic analysis from below cases which Identifies the relevant theoretical issues underlying the problem of Amazon.

Analysis 1

If Amazon is the successful company that we know today, it is because it has been focusing one principal goal since it started in 1995, which is to be Earths most customer-centric company (Amazon's global career site). This is the common goals that bonds Amazons employees across the globe. It seems that the company works really hard in order to please their customer by providing a top-quality service.

Amazon values are what they call leadership principles (Leadership Principles). The company is obsessed by the customer. The company works very hard towards earning and keeping customer trust. It also points out ownership. Focusing on the long-term is a better option because the short-term value is important but not sustainable for a firm. The company is always seeking new ways to innovate and invent to make things simpler for their teams. Amazon has leaders with strong business judgement and good instincts which does not stop the fact that learning never ends and that they should always find ways to progress. Amazon insists on the highest standards, and that attract a lot of criticism. It is raising the bar high that allowed Amazon to be what it is today delivering high-quality products, services, and processes.

Amazon was able to expand his business and grow as a company thanks to it large range of resources. Resources can be divided in three different groups: tangible, intangible and human. The most durable tangible resources the company has had is its headquarters located in Seattle, Washington. The company owns more than 110 fulfillment centers in the United States and more than 185 centers across the globe (Naterattner). The most valuable resource amazon has is intangible. It is its platform that regroups more than 1.7 million businesses that offer a broad variety of products around the globe. The companys e-commerce website allows and facilitates the exchange of products for Amazon large customer base.

Amazon is considered as a hierarchical structure. Amazon has three CEOs. The main one is Jeffrey Bezos who is also the President and Chairman of the Board. Andrew Jassy is the CEO for Amazon Web Services and Jeffrey Wilke is the CEO of Worldwide Consumer (Officers and directors). There are three Senior Vice Presidents who have the main task of reporting to the principal CEO who is Jeffrey Bezos. As of December 2019, the company counted nearly 798,000 full-time employees worldwide. Due to the seasonality of business, Amazon often adds independent contractors and temporary recruits to its workforce.

The company is in a fast-growing industry where the competition is very intense. Amazon has a large range of competitors due to its global presence and its large variety of products and services it is offering to customers. Amazon has competitors in various different sectors all across the globe. The main current competitors are other e-commerce or physical retailers, manufacturers, digital contents distributors and publishers., companies providing logistics and fulfillment services (Annual Report 2019). It goes beyond that small list of potential competitors for Amazon. The biggest competitor for Amazon is Walmart that was outshined for the first place for largest retailer. Walmart also has a large global presence, operating 11,718 stores in 28 countries and various e-commerce websites in 11 countries and regions (Exhibit 8a, Amazon.com, 2019).

Other big companies are also in the race for largest retailer competing with Amazon such as Apple, Microsoft, Google, Best Buy, Facebook, Alibaba, and eBay. Those competitors are the main ones Amazon is in competition with. Most of them generated more than $50 million in revenue per year.

It appears fair to say today that Amazon sells pretty much everything because of the large variety of products and services that it is offering. Amazon gets its customers from both online and physical stores. The emphasis is on price, convenience and selection. The company was able to make its stores full of millions of unique items ready to be sold. The items sold by Amazon are accessible through its websites, mobile apps, Alexa, devices, streaming (Annual Report 2019) and physically visiting its stores. The main reason why Amazon has many fulfillment centers is to ensure fast and free delivery service. Indeed, the closer the center is to the customers, the faster the ordered items will be delivered. It is part of the firms customer service strategy because it facilitates both deliveries and returns for physical items. Amazon wants to please its customers and retain them for continued business. AmazonPrime is a feature that allows customers to an unlimited number of free shipping on over one hundred million different products. In addition, it also gives access to Amazons streaming services full of movies, TV shows, and other. The company is doing very good at showing its Prime members that they are valuable. Looking more into the customer relationship with Amazon, we found an article with valuable information. When customer retention increases by 5%, the results is a boost of profits going from 25% up to 95% (Mariano). We consider customer retention because this seems to be a factor of success for our company. Amazon has a large Prime customer base, estimated to be 105 million in the US in June 2019, which is 82% of American households. The retention rate for Prime memberships was 93% after the first year and 98% after two years. This is incredible results for Amazon because it causes a large increase in revenues year over year. An average Prime member would spend $1,400 per year on products and services by Amazon. That says a lot about customer loyalty. The company does that by catching the eye of the new user, personalizing the experience of a return customer, creating a sense of urgency by delivering sales days, making the process as easy as possible for anyone and offer different perks such as free shipping or return for the loyal customers.

Until the end of 2016, the company had a pretty unique way of dealing with suppliers. The retail giant used to own all items it sold (Rao). The items were handled directly by Amazon. Amazons suppliers are now also third-party sellers, entrepreneurs and businesses of different sizes. Suppliers create their own store on the platform in order to be public. The items are sent to fulfilment center and Amazon handle the delivery of those items to the customers. Amazon makes this process as easy as possible on suppliers. The company disclosed an accurate list of its suppliers when a list of about 1,500 private label suppliers was published on the main website aboutamazon.com (Leonard). The same article also indicates that most of Amazons suppliers are located in East Asia. Europe.

Amazon has a very broad market scope. As it appears in the case study from Harvard Business School, Amazon was initially an online book store. Over the years, it became the online platform that we know today, where millions of products are traded. Amazon came up with its branded pieces of technology that became very popular suck as Kindle or AWS (Amazon Web services). When the company started it business, it quickly began to establish its international presence. It acquired Bookpages in the UK and Telebook in Germany in 1998 (Amazon.com, 2019). From there, Amazon started provides goods and services beyond the book category. Amazon had a rapid growth due to its vertical integration. By its early operating time, the company made significant investments to ameliorate its distribution. Amazon had 10 warehouses by 2000, both in the US and internationally. This lead to improve its fulfilment of orders and also its customer service. It is fair to say that today Amazon has succeeded in having efficient warehouses. For example, the company suggests to its Prime members same-day delivery. In 2015, Amazon purchased Elemental Technologies for $296 million (Moynihan), which went under Amazon Web Services. Just a few years after this companys service became very successful and profitable, earning Amazon $25.7 billion in 2018 only. All along its business, Amazon have taken a lot of strategically right decisions, which allow it to be the top player in its industry. The strategy Amazon established includes free shipping and convenience for a very broad product scope. It offers its items for competitive prices. Amazons competitive advantage is also providing customer with a unique experience such as easy checkout.

The direction in which Amazon wants to go has been clear since its inception. Its vision statement is to be Earths most customer-centric company, where customers can find and discover anything they might want to buy online (Gregory). This statement clarifies the desire for the company to become the best of its industry. The company mission statement is We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience. It was always the firms goal to focus on offering a variety of product for very low prices and providing the customer with a unique strategy. Low prices make Amazon more attractive because of the wide range of product listed on its website. Over the years, Amazon has been able to accomplish that mission by retaining its customers who always doing business with the company.

Since its inception, Amazon highlighted the four principles that drives it to business. There are customer obsession rather than competitor focus, nurturing a passion for invention, maintaining a commitment to operational excellence, and a focus on long-term thinking (Staff). While the company is always trying to get the customers trust as it will allow to keep him/her, some other companies are just here to compete. Amazon want something different than usual. To retain its customers, the company keep focusing on new ways to please customer such as a new product or new service. As Amazon prioritizes the operational performance, it directly allows it to focus on improving the customers experience and the service to all its stakeholders. A lot of companies think short-term, but Amazon does different thinking long-term mainly, and that is what allowed the group to get better and better over the years. If Amazon has a large influence today, it is due to the right decision of capital expenditure that have been made, acquiring companies that bring back a lot more revenue that they costed. It is fair to say that Amazons team has the eye for successful investments. That is why the group went from selling books to selling everything on a platform that is accessible in 190 countries. Amazon has understood that you cannot be successful all by yourself or by your own resources, and that very early. Amazon brought third-parties sellers in 2002. Working with them allowed the company to generate more revenue. As the second quarter of 2002, Amazon reported that third-party transactions represented 20 percent of its North American sales, and by 2010, the marketplace accounted for more than 35 percent of sales (Palmquist).

Analysis 2

When looking at Amazons performance, we considered Mergent Online in order to know where Amazon stands compared to its competitors in further details. As we can see in the first table attached in Appendix, Amazon is on top of the list in the competitors category. AT&T is right behind and then Alphabet Inc (Google). Some companies follow Alphabet, but they are not as close as the top three in term of revenues. This indicates that Amazon is doing very well in its industry. However, Amazon does not come up first in all those categories presented. Amazon is said to be the largest company, it has the biggest market cap of $1.5 trillion. The company comes third in term of net income with $11.58 billion, as well with the EBITDA of $29.84 billion. One would think that because of the status of Amazon, it could be reasonable to have the most valuable assets, but Amazon is third position for assets after AT&T and Alphabet with $225.25 billion. Amazon goes second in total liabilities with $163.18 billion. It is looking good for the firm because it has more assets than liabilities. Its share price is the highest of $3,186.73 and a PE ratio in second place after Fluent Inc of 93.28%. This high stock price tells us a lot in terms of performance. Over the years, Amazon has been innovating a lot, investing in new technology, that helped it grow faster. The high P/E ratio could suggest that stockholders have higher expectations for their earnings. Also, it does not mean that it is a better investment than SPAR Group, Inc with a ratio of 47.4%. There is a possibility that Amazon stock is overvalued.

Moreover, using Yahoo Finance helped us discover more financial data on the company. We made a table that shows some financials from 2016 to 2019 presented in the balance sheet and income statement (Table 2). This table shows for every category a rise one year to the next one. It proves that in fact Amazon had a huge growth one year to another. We also notice that while the assets have been high every year, surprisingly, the net income have been low. The low net income is mainly caused by the large amount of liabilities Amazon. The company has purchased some other companies which made them spend a lot of money. For instance, Amazon purchased Whole Foods Market for $13.7 billion (Staff). It was by far the largest gain for Amazon in 2017.

With the information from the previous table, we were able to figure out some liquidity ratios for our company. The current ratio indicates the ability for companies to pay off their debt. Amazons current ratio for 2019 and 2018 is 1.10. For the years 2017 and 2016, the current ratio was 1.04. As long as this ratio is over 1, it shows that the company is able to take care of it liabilities. However, 1.1 and 1.04 do not seem to be a very strong ratio. We could say that it is a very close matter for Amazon to not be able to pay off its debt. The higher the quick ratio is, the better the abilities of the companies to repay its current debt without having to sell its inventory. In this case, we can observe a better performance for Amazon. For 2016 and 2017, the firm had a quick ratio of 0.78 and 0.76 respectively, and that is lower than the result from 2018 and 2019, 0.85, 0.86 respectively. There has been an improvement for the company. It definitely proves that the company has been doing good in increasing its assets, even though it had increasing liabilities. The company has a cash ratio of 0.63, which the highest of the four years listed in the table. For the cash ratio, 0.5 to 1 is usually preferred and Amazon had more than 0.5 for every year. We can deduce Amazon was doing well at providing its current requirement such as paying wages.