Name: Aakansha Jeewani

Reg no: 11310983

Section : Q3302
Group :1
Date: 16. Sept. 2013

CASE ANALYSIS:
AA!"N: "NE E#S$"%E $" %&LE $'E ALL

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INTRODUCTION
Amazon.com, Inc. (Amazon.com) is one of the leading online retailers and web
service roviders in the world. !he coman" rovides rod#cts incl#ding
aarels, a#to and ind#strial items, bea#t" and health rod#cts, electronics,
grocer", books, games, $eweller", kids and bab" rod#cts, movies, m#sic,
sorts goods, to"s, tools and others. It also rovides a n#mber of services
incl#ding home deliver" and shiing, website hosting and other web related
services. It offers its merchandise thro#gh coman"%owned retail websites. !he
coman", along with its s#bsidiaries, oerates in North America and other
international
SWOT ANALYSIS
&. 'trength
(#stomer centric b#siness:% !he coman" has adoted a n#mber of echnologies to make
its websites c#stomer friendl". 'ome of the ke" feat#res the websites incl#de editorial and
c#stomer reviews, man#fact#rer rod#ctin formation,gift g#ides, web ages c#stomized to
individ#al reference s#ch as recommendations and notifications, &%(lick technolog", sec#re
a"ment s"stems, digital content and )'earch Inside the *ook) feat#re. (#stomers can track
their orders online thro#gh +,o#r Acco#nt- website feat#res. .ith c#stomer service centers
globall", the coman" can easil" cater to the c#stomers- needs. In addition, it
offers free shiing otions worldwide. All these feat#res enhance the online shoing
e/erience of its c#stomers,res#lting in high c#stomer lo"alt". !he coman" also e/anding
its c#stomer reach, which rovides a wide scoe to serve
large n#mber of c#stomer across the world. Recentl", the coman" established its Amazon
Astore in the 01, 2erman",3rance, Ital" and 'ain, offering 4#roean c#stomers access to
Amazon-s broad selection of 5#alit" Android as with the
convenience of shoing on Amazon from their Android hones and tablet
Strength - Assortment of Products
!he coman")s owns a broad rod#ct ortfolio, which enables it to serve a diversified c#stomer base.
Amazon.com offers its c#stomers a one%sto shoing environment ranging from aarels to
electronics to grocer". Along with a wide choice of merchandise and efficient c#stomer service, it
emhasizes on selection, rice and convenience. Its rod#ct offerings comrises aarels, a#to and
ind#strial items, bea#t" and health rod#cts, books, com#ters, digital downloads, electronics,
grocer", games, home items, $ewelr", kids and bab" rod#cts, movies, m#sic, office s#lies, o#tdoor
items, shoes, sorts goods, to"s, tools and others. In addition, the coman" foc#ses on roviding this
merchandise at the lowest rices ossible thro#gh ever"da" low rod#ct ricing and free shiing
offers incl#ding Amazon 6rime. 7#e to the broad rod#ct assortment and attractive ricing, increasing
n#mber of online shoers are attracted to the coman")s online shos. Recentl", Amazon introd#ced
1indle 3ire, the most%advanced tablet roviding a f#ll"%integrated, end%to%end service for c#stomers.
It la#nched Amazon !e/tbook Rental to rent tho#sands of te/tbooks for college st#dents for the
semester. '#ch rod#ct offerings rovide the coman" with a strong latform for financial growth in
f#t#re.
Strength - Strong Business Model
!he coman" has strategicall" enhanced its b#siness oerations thro#gh e/anding its b#siness areas
to different rod#cts. !he coman" diversified its oerations from online bookstore to wide variet" of
online merchandising. !he coman"-s direct%to%cons#mer online model hels in increasing its
inventor" t#rnover and better ret#rns. !he coman"
#nder its b#siness models oerates small lean wareho#ses in m#ltile geograhies. !he direct to
cons#mer b#siness model hel the coman" to manage its caital investments for wareho#ses and
inventor" risks. !he coman" e/anded its rod#cts and services offerings to wide variet" of
rod#cts, which hel it to increase its sales vol#me. It offers online
retailing of rod#cts based on ever"da" low ricing model. !he coman" e/tended its resence in
different co#ntries thro#gh offering co#ntr" secific websites and f#lfillment networks. Amazon
tested it-s all new feat#res in the 0' markets than relicating the most s#ccessf#l vent#res in
international markets. Its rod#ct offerings are e/anding thro#gh
agreement with third%art" sellers across the world. !he coman" also attracts c#stomers thro#gh
oerating different websites for generating better economics of scales in c#stomer vol#mes towards its
rod#cts. In addition, the coman" markets e%commerce latforms to other retailers for #sing
technolog". !he coman" #nder its b#siness model also offers
b#ndle services to c#stomers leverage its economies of scale to bring greater efficienc" and lower
rices to the market. !he b#ndled services of the coman" f#rther diversified its resence in e%
commerce markets to other latform services within the clo#d com#ting ind#str".
Weakness - eclining Li!uidit"
7ecrease in working caital with increasing debt in balance sheet affects the financial stabilit" of
Amazon. !he coman" reorted c#rrent ratio of &.&8 times in 9:&& as comared to &.;9 times in
9:&:. !he decline in cash reserve has affected the overall cash ratio, which decreased to :.<= times in
9:&& from :.>= times in 9:&:. Its 5#ick ratio reorted a decline to
:.>; times in 9:&& as comared to &.:& times in 9:&:. Amazon-s total debt for the fiscal "ear ended
7ecember 9:&&reorted a h#ge decrease over last "ear. It acco#nted ?&,@;@m in 9:&&, indicating
9:9.AB increase over ?<=&m in 9:&:.
Weakness - eclining O#erational $fficienc"
!he coman" reorted declining margins and rofitabilit", with increased cost str#ct#re, which
reflects its declining oerational efficienc". !ho#gh the coman"-s reven#e increased b" =:.<B from
? ;=,9:=m in 9:&: to ?=>,:88m in 9:&&,its oerating income decreased b" ;>.8B from ?&,=:<m in
9:&: to ?><9m in 9:&&. !he coman" reorted challenges in
maintaining its rofitabilit" d#e to increased cost str#ct#re, dela"ed in investment b" its c#stomers,
and economic regression in the 0'. !he coman"-s oerating cost as ercentage of sales increased
from @A.>>B in 9:&: to @>.>>B in9:&&. !he coman" reorted drastic decline in 4*I!7A growth in
9:&&. !he 4*I!7A growth of the coman" declined to(;8.<:B) in 9:&& as comared to 9>.@=B
growth in 9:&:. Amazon-s oerating margin decreased to &.8@B in 9:&& from=.&&B in 9:&:. !he net
rofit margin of the coman" declined to &.;&B in 9:&& as comared to ;.;<B in 9:&:.
O##ortunit" - Positi%e Outlook for e-&etailing
2rowing Internet enetration, along with the rising familiarit" of online shoing, has transformed
the retailing ind#str".!hese da"s, more and more c#stomers refer sho online to save the time
cons#med in $o#rne" and long 5#e#es for billing. According to Internet world stats, the internet #sers
have increased tremendo#sl". !he to ten co#ntries with highest
#sers of internet incl#de (hina, the 0', India, Jaan, *razil, 2erman", R#ssia, Indonesia,the 01 and
3rance. 3or the eriod between 9:::%&&, the internet #sage grew b" 9,@>>.=B in Africa, 8>@.<B in
Asia, ;8<.=B in 4#roe, 9,9==.>B in Ciddle 4ast, &A9.<B in North America, &,9:A.&B in Datin
America and 9&= B in Eceania and A#stralia

O##ortunit" - $'#ansion Plan
!he coman")s strategic initiatives to widen its resence and strengthen its assortment of rod#cts
drive growth oort#nities. In A#g#st 9:&9, the coman" established its Amazon Astore in the 01,
2erman", 3rance, Ital" and 'ain, giving 4#roean c#stomers access to Amazon-s broad selection of
5#alit" Android as with the convenience of shoing
on Amazon from their Android hones and tablets. In Carch 9:&9, the coman" anno#nced to oen a
new f#lfillment centerin Jeffersonville, Indiana, the 0' with an investment of ?&A:m. !his is the
coman")s fifth f#lfillment center in Indiana. In
3ebr#ar" 9:&9, the coman" anno#nced its lans to establish a f#lfillment center in Ciddletown,
7elaware, the 0' with an investment e/ceeding ?@:m. In Jan#ar" 9:&9
O##ortunit" - $'#ansion Plan
!he coman")s strategic initiatives to widen its resence and strengthen its assortment of rod#cts
drive growthoort#nities. In A#g#st 9:&9, the coman" established its Amazon Astore in the 01,
2erman", 3rance, Ital" and 'ain,giving 4#roean c#stomers access to Amazon-s broad selection of
5#alit" Android as with the convenience of shoing
on Amazon from their Android hones and tablets. In Carch 9:&9, the coman" anno#nced to oen a
new f#lfillment centerin Jeffersonville, Indiana, the 0' with an investment of ?&A:m. !his is the
coman")s fifth f#lfilment center in Indiana. In 3ebr#ar" 9:&9, the coman" anno#nced its lans to
establish a f#lfilment center in Ciddletown, 7elaware, the 0' with aninvestment e/ceeding ?@:m. In
Jan#ar" 9:&9, online 7F7 and games rental%b"%ost as well as thro#gh films and !F shows. In
organic growth strateg" adoted b" the coman" ma" significantl" increase its market share
Threat - (onsumer S#ending
!he coman"-s b#siness is sensitive to red#ctions in discretionar" cons#mer sending which co#ld
res#lt from the downt#rns in the econom". !he coman" oerates in retail ind#str" which is sensitive
to market fl#ct#ations and sending attern of its c#stomers. According to the news release b" .orld
*ank in Jan#ar", &>, 9:&9, the global econom" is set grow $#st 9.AB in 9:&9, which is weighted down
mainl" d#e to rile effects from the 9::> financial crisis. 3#rther, sovereign debt crisis in 4#roe
e/acerbated the stat#s 5#o.
Threat - Market (om#etition
!he coman" oerates in a highl" cometitive online retailing market. It cometes with other online
e%commerce and mobile e%commerce sites, h"sical%world retailers, #blishers, media comanies and
other comanies designing, man#fact#ring, marketing its digital media devices. !he coman"
cometes with the above mentioned la"ers on the basis of rice, selection, convenience, 5#alit",
seed, and reliabilit" of its services and tools. 'ome of the coman")s cometitors incl#de e*a" Inc.,
,ahoo
Threat - Stringent )o%ernment &egulations
!he coman" is s#b$ect to vario#s reg#lations governing the internet, e%commerce and electronic
devices in addition to general b#siness reg#lations and laws. !his incl#de reg#lations related to
ta/ation, rivac", data rotection, ricing, content, co"rights, electronic device certification,
electronic waste, cons#mer rotection, the rovision of online a"ment services, the design and
oeration of websites, and the characteristics and 5#alit" of rod#cts and services. (#rrentl", the 0'
'#reme (o#rt decisions, restrict the imosition of obligations to collect state and local sales and #se
ta/es with resect to sales made over the Internet.

Ca$or roblems of Amazon (oman"
Amazon s5#ared off against tech ind#str" giant ale b" la#nching its amazon m;
m#sic downloading ind#str".
6roblem of digital rights management (7RC)
6roblem broadband connection
Dack of technolog"
'ol#tions
imagine ale and amazon will be having some heart to heart negotiations
controversial technologies that are #sed b" hardware man#fact#res #blisher.
7RC big b#siness innovation and cometitors digital locks laced in
accordance with digital rights management olicies.
*roadband connection roblems sol#tions with the hel of Cicrosoft word
doc#ments.
In this coman", there are lack technolog" beca#se this coman" #se old
technolog" d#e to this coman" co#ld not fight cometition with other
cororations this coman" sho#ld #se advance technolog" for fast rod#ction
and will hel in fighting cometition with cororations
(A'4 G04'!IEN AN'.4R':
&. In what wa" does *ezos-s decision to develo and sell the kindle show s"stematic and
int#itive thinkingH
Answer: *ezos, sold most logical thing over the internet % books. It was beca#se *ezos was willing to
bet that book b#"ers wo#ld be willing to give # the coz", coffee%sho, browsing
environment of the local bookstore if he co#ld offer them the Iearth-s biggest bookstore,J fantastic
c#stomer service, and feat#res that no h"sical bookstore co#ld match c#stomer book review, a#thor
interviews ,ersonalized book recommendations and more. Effering 1indle showed a f#t#ristic
oint of view since digitized media has become more and more revalent nowada"s. It is also
based on a s"stematized thinking that readers tend to be bored with $#st the lain old
book reading and contin#es to e/and their interest not onl" in digitized books ,b#t other
feat#res that the 1indle might be able to offer as well.
9. Kow do "o# describe the cometitive risk in Amazon.com-s environment as it enters
the market for digital movie downloadsH
Answer: Altho#gh Amazon recentl" released 0nbo/, its video download service, it is far
from dominating the sector. 7ownloadable video for #rchase faces cometition from the
growth of indeendent online video and charge%free offerings s#ch as ,o#!#be. !he
initial la#nch of 0nbo/ was also criticized for being hamered b" #sabilit" iss#es%%
reviewers comlained abo#t long download times and limited la"back caabilities,
ca#sed in art b" strict digital rights management limitations. An other ma$or drawback
was its alliance towards the windows comatible devices alone. It tried to niche its market
from ale this roved to limit its own market as the brand image ale has in the inds of
its c#stomers.
;. .hich decision errors and tras are the greatest threats to the s#ccess of *ezos-s
decision making as the (4E and wh"H
Answer: *ezos the (4E of Amazon has his own stor" of s#ccess and fail#re: Also
known for Lth#mbing his nose at .all 'treet,L.
!en "ears or so ago, some anal"sts were sa"ing that Amazon wo#ld never make
mone", desite Cr. *ezos making the case for the coman" investing in its f#t#re b"
sacrificing short%term rofits for long%term growth. !oda", the Amazon (4E is facing
some criticism following a weak 5#arter for selling the new 1indle 3ire tablet at a
loss so it can comete for market share with Ale)s i6ad and *arnes M Noble)s (olor
Nook. Amazon has been reorting Lrazor thin marginsL for the ast few 5#arters and
Cr. *ezos warned that the coman" ma" di into the red in the =th 5#arter d#e to
heav" sales of the 1indle 3ire. *#t the ceo is hoef#l and otimistic abo#t the f#t#re
he believes it-s the c#stomers that make # amazon and not its stock rice which
motivates him for contin#o#s innovation.
=. .hat are the latest initiatives coming o#t of amazonH Kow does it face cometitionH
Answer: *ezos has taken long term initiatives for the imrovement of the coman"
b" taking several strategic decisions which mainl" incl#de the emlo"ees of
Amazon :
Investing in its eole b" financial means
7iversit" in the work lace
New hr olicies are being adoted
7eveloing the e/ec#tion of effective recr#iting strategies
3or facing the cometitors the main initiative that *ezos follows is
INNEFA!IEN: in vario#s wa"s for e/amle :
Da#nced an a of a#dio books for ale and android hones.
Amazon cross translation imrint to resent books in < different
lang#ages.
Amazon-s instant video achieved the emm" words.
!r"ing to achieve a foothold in the grocer" b#siness too.