Team Executive Summary

Team Executive Summary Case Statement: Amazon faces the fact of not opening and building a new headquarters in the state of New York due to limited state and local relationships between Amazon and the state’s elected officials. Mission and Vision Evaluation: To be earth's most customer-centric company; to build a place where people can come to find and discover anything Amazon might want to buy online. Amazon is guided by four principles: customer obsession rather than competitor focus, passion for innovation, commitment to operational excellence, and longterm thinking. • Customer Obsession • Ownership • Invent and Simplify • Learn and Be Curious • Hire the Best • The Highest Standards • Think Big • Bias for Action • Earn Trust • Deliver Results Amazon has a great mission and vision statement; however, the mission and vision statements lack some key components that would show case the company as a whole and inform their employees about the values of the business. The mission statement is the use of technology, and the overall nature of the business. The vision statement could provide more insight to employees, such as including; its new services and promoting its brick-and-mortar stores. Milestones: • 1995: Amazon sold its first product – a book titled “Fluid Concepts and Creative Analogies” by Douglas Hofstadter. The book was sold from Jess Bezos’ garage, where Amazon was first running business. • 2005: Amazon unveils Amazon Prime in. Amazon Prime is a $79 annual customer loyalty program. This program provides many benefits for loyal customers such as free overnight shipping and early access to products.

Amazon Prime has been proven to be one of the most valuable assets of Amazon. • 2018: Amazon raised minimum wage to $15 an hour for all US employees. This pay increase will positively affect the hundreds of thousands Amazon workers. Internal & External Assessments External Assessment: • So far, Amazon has been able to strategize efficiently to take advantage opportunities and avoid threats. But, there is still room for improvements. Internet expansion increasing e-commerce markets, potential depth in the Asia and the Pacific, and an increase in tech savvy shoppers are important factors that Amazon should be taking advantage of. Amazon faces many threats that could potentially harm the company. Capable and comparable online competition and ease of entry into the market are among their greatest threats. Amazon has a great opportunity with their bargaining powers between customers and supplies. If Amazon loses a few customers, it will not hurt their business because they are acquiring new customers every day. Suppliers are willing to accept any negotiations just to do business with Amazon. Internal Assessment: • Amazon operates within a strong brand name, company culture and high sales. Amazon has been doing great in the market with their existing services and newly created services while avoiding the risks. Amazon’s strong brand name and great customer service is a reason for their rapid growth and continued success within the industry. However, Amazon has major weakness with increasing shipping cost on certain products and not keeping their shipping costs streamlined across all goods and services, and new ventures of introducing products with no relevance. Amazon can defeat the odds of their weakness through their venture to ship items 7 days a week and conducting business with local carriers. Industry Analysis • The intensity and rivalry among competing firms is very high. Amazon has been dominating their market for years, with competition such as Apple and Wal-Mart, Amazon manages to stay ahead of competition. One reason that Amazon is always ahead of their competition is their use of technology. Amazon having its own web services (Amazon Web Services, AWS), the

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business can capitalize from their technology and allow their competitors to pay for utilizing their software. The barriers of entering into Amazons online market are very low. Amazon faces the risk of new entrants into their market because Amazon can’t compete with more niche businesses and businesses offering more personalized products. Smaller companies are entering the market because they can provide smaller, personalized goods at the same or cheaper prices. Amazon must take concrete steps to discourage new entrants. Amazon’s suppliers don’t have much power, as there is a large amount of available suppliers and a vast span of online global distribution. The suppliers are almost begging to work with a business giant such as Amazon; therefore, suppliers are willing to pay any amount of money just to do business with Amazon. Customers have a major buying power with utilizing Amazon and their services. Amazon has so many existing customers and drives new customers to their website on a daily basis. Amazon’s revenue continues to increase each year, allowing customers to drive prices down through such programs as Amazon’s Prime membership, where loyalty customers benefit from many perks such as free shipping. The threat for substitutes for Amazon is not major problem. The substitutions for Amazon are brick and mortar retailers, branded outlets, discount shops, and stands. Amazon stands out against their threats because of their wide variety of products, services, third party vendors and internet traffic control.

Financial Analysis The three most important financial ratios for Amazon are: • Sales Growth Rate- Amazon’s growth rate is close to 30% because of they have stood on the forefront of e-commerce and on-line book publishing. Amazon continues to make capital investments using cash flow from operations and their debt to equity ratio. • Profit Margins- Amazon focuses on top line profit margins because the business believes that increasing market share will decrease prices. Amazon's operating margin and net profit margin are a mere 1.71% and 0.35%, respectively. • Valuation Metrics- Amazon’s valuation metrics (price-to-earnings and priceto-books ratios) surpass metrics of their competition. In their current market, most companies would have a P/E and P/B in the teens and Amazon’s P/E

and P/B are 900 and 30. This means that Amazon needs to level out their ratios through shifting their operation from sales-focused to earning-focused. Amazon’s Strategies Competitive Strategies • Unrelated diversification would be a recommended strategy for Amazon. Unrelated diversification strategy is the process of organizations acquiring other successful unrelated businesses across different industries. • The corporate or business strategy that is recommended for Amazon is Differentiation Strategy (Type 3). This would be the most suitable for Amazon as in this strategy allows a business to charge more for its products and gain consumer loyalty because consumers may be attracted to the business’ differentiation features. • Building business relationships with local and state officials to better understand the region and location of which Amazon is seeking to integrate a new headquarters. This would be a great strategy for Amazon to integrate into new local and foreign markets. Recommended Strategy • The recommended strategy would be for Amazon to create and sell more of their own products, such as a cell phone. This is the best strategy because Amazon is already leading in voice, with the Amazon Alexa and Echo Dots. If they were to introduce a cell phone that could pair with other voice activated products, they would have a competitive advantage. By creating their own smart phone, Amazon would have the goods sold under their name, rather than an outside vendor. Ethical and Social Responsibility Dimensions of the Recommended Strategy: • Amazon has an ethical responsibility for their customers and the environment. They are responsible for providing customers with low priced, high quality products with excellent customer service. While products are in their hands, Amazon must take appropriate care of the product, safely delivering it and causing no damage. Amazon also has an ethical responsibility of providing their workers with suitable working conditions. Implementation Plan • Amazon currently has enough revenue to finance new business opportunities. The implementation to integrate smart phones into their business brand is a huge project. The cost of the integration project is slated around 150 million dollars. With Amazon having control over their debt,

there is room for Amazon to expand into creating and innovating cell phones. Financial managers and their teams have been hand-selected to produce financial documentations to finalize all cost of the final project and to ensure that funds for the project are appropriately disbursed.