Case amazon
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Researching Amazon company about Financial, SWOT, Competitive Advantage
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Case amazon
- 1. Case 1: Amazon.com Presented by Team 8 The Back Corner Robert Wise Thao Bui Tung Lu Huynh Vo Shirley Kaeratana Monday, January 11, 2016 Speaker: Team
- 2. “Student Success” Mystery Prize Speaker 1: Robert Wise
- 3. Agenda Speaker 1: Robert Wise Component Speaker # Name Minutes Total Time Agenda handout / Mystery Box 1 Robert Wise 1 1 Company Background 2 Shirley Kaeratana 2 3 Current News 3 Thao Bui 2 5 Financial Statement 4 Tung Lu 2 7 SWOT Analysis 4 Tung Lu 4 11 Case Questions: Question 1 5 Huynh Vo 4 15 Question 2 1 Robert Wise 4 19 Question 3 3 Thao Bui 4 23 Summary 1 Robert Wise 2 25 Quiz & Open Discussion 5 30
- 4. Company Background: Mission Statement Speaker 2: Shirley Kaeratana “Our vision is to be earth's most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”
- 5. Company Background Speaker 2: Shirley Kaeratana Founded in a garage in Bellevue, Washington in 1994 by Jeff Bezos. Headquarters in Seattle, Washington Originally started as an online bookstore Amazon’s logotype features a curved arrow leading from A to Z
- 6. Company Background Speaker 2: Shirley Kaeratana Amazon’s products and services include: Retail goods Amazon Prime Kindle Fire PrimeNow
- 7. Amazon partners with Ford to connect cars with home Speaker 3: Thao Bui
- 8. AMZN Stock Performance vs S&P500 Speaker 4: Tung Lu
- 9. Financial Facts about Amazon Speaker 4: Tung Lu How Big is Amazon? Revenue in 2015 was $89B (Microsoft $78B, Target $72B, Apple $231B, Walmart $485B) What does Amazon do with profits? Net income for two of the last four years was negative. Unlike other large companies, Amazon reinvests nearly all of it’s income in capital expenditures to support rapid growth. Investors have mixed opinions.
- 10. Financial Facts about Amazon Speaker 4: Tung Lu Largest Acquisition: Zappos in 2008 for $1.2B P/E Ratio is unheard of: The average P/E ratio for the retail sector is 17.6. Amazon’s P/E ratio is currently 341. Stock buyers are paying for 341 years of earnings when buying a share of amazon.
- 11. Financials: Net Income as % of Sales Speaker 4: Tung Lu 22% 22% 4% 3% 0%
- 12. Financials: Net Income vs. Revenue Speaker 4: Tung Lu 22% 22% 4% 3% 0%
- 13. SWOT Analysis: Strengths Speaker 4: Tung Lu 1. Cost leadership strategies: Amazon strategy is to products and services that have lower cost than its competitors. 2. Superior quality services and products : Amazon delivers only best products with best quality services. It’s reliable, convenient; offer one of lowest price or free shipping. 3. Strategic acquisitions: Amazon has been acquiring new firms to bring to its own products such as cloud services, information management and customer relationship management skills.
- 14. SWOT Analysis: Weaknesses Speaker 4: Tung Lu 1. Online store only: Amazon does not have physical stores where customers can come and take a look 2. Negative publicity: Amazon has it negative publicity in UK and US to avoid the tax where it earns the most revenues. It also has issues for the poor warehouse condition for workers, price discrimination.
- 15. SWOT Analysis: Opportunities Speaker 4: Tung Lu 1. Online payment system: Amazon could extend their payment system by adding services like PayPal 2. Create more of it own products: Amazon could benefit by releasing more of its own brand products. 3. Open more online store in other countries: Amazon could open online store in some Asian and Europe countries to extend its business oversea. 4. Physical presence: Amazon could establish some present store in market it operates
- 16. SWOT Analysis: Threats Speaker 4: Tung Lu 1. Online security: Amazon stores its customer bank information online, and there are so many fraud going on right now for online theft. 2. Lawsuit: The business already has some issues with tax authorities for tax avoidance
- 17. Question 1: Speaker 5: Huynh Vo • What does the competitive structure of online retailing industry look like? What are the implications of this structure for the long- run profitability of Amazon in the market?
- 18. Porter’s Five Forces: e-commerce Speaker 5: Huynh Vo Forces Application Bargain Power of Supplier Many any supplier for any product. Online market share continues grow, supplier save money by providing online sales. Marked advantage: Amazon only pay supplier 35days after product sold. 40% Amazon sale are third party. Set 20% commission. Bargain Power of Buyer Many e-commerce competing market share (ebay, walmart, etsy). Little effort shopping. Cheaper prices. Regular customer: Low rate of customer switching from Amazon. Threat of New Entrant Large capital required to setup infrastructure and maintain dominance. Difficult to obtain Amazon's market share (Amazon continues to dominate) Threat of Substitute Future is online retail: save time, effort, money. Amazon is well recognized and has strong market position. Customer retention high at Amazon : loyal customers are more profitable. Low prices is principal attraction to Amazon. Rivalry amongst Competitors Many competitors: company need to stay in customer's mind. Amazon continues to innovate: 1 day delivery Only Walmart is direct competitor, no other company has core competencies to compete.
- 19. Porter’s Five Forces: e-commerce Bargain Power of Supplier Low Positive for Amazon. Bargain Power of Buyer High Trend decreasing. Amazon is prefer choice for online- shopper. Threat of New Entrant Low Few can compete at Amazon’s level. Threat of Substitute Low Positive for Amazon. Competitor Rivalry Moderat e Short term prospect is good. Total Strong strength and expected continued profitability for Amazon Speaker 5: Huynh Vo
- 20. Question 2 (pt I): Internal Factors Affecting Competitive Advantage Speaker 1: Robert Wise Superior Quality: Amazon Video-On-Demand consistently rated as high as Netflix in customer satisfaction. Nobody can compete with Amazon’s 2-day shipping. Customer data is protected with the highest rated security. Superior Efficiency: Efficient warehouse infrastructure, distribution centers, robotic inventory management. Strong network of shipping partners. Revenue per Employee: $575K VERY GOOD! (Walmart is $201K)
- 21. Question 2 (pt I): Internal Factors Affecting Competitive Advantage Speaker 1: Robert Wise Superior Innovation: Elastic Compute Cloud (EC2) (largest cloud services provider) Drone delivery of goods is being developed (Prime Air in 4-5yrs) Expanding into global markets faster than competitors
- 22. Question 2 (pt I): Internal Factors Affecting Competitive Advantage Speaker 1: Robert Wise Superior Customer Responsiveness: Most customer issues are instantly resolved online. Return policy is very forgiving. Amazon saw a record 3 million new Prime sign-ups in December.
- 23. Question 2 (pt II): Macroenvironmental Factors Affecting Competitive Advantage Speaker 1: Robert Wise Macroeconomic • Less sensitive to recession than competitors because of low prices. Technological • Amazon benefits from new technology; items need to reach consumer. • Sharing culture (Uber, Air BnB) could leak into physical goods someday. Political/Legal • Lost 10% of sales in states that required Amazon charge sales tax. Social • “Go Green” movements could threaten a retailer that uses packing materials. • Hackers target larger online companies
- 24. Question 3: What extent is Amazon’s competitive advantage sustainable? Speaker 3: Thao Bui LOW COST OPERATION: • Low price possible • Negotiating space inside of supplier’s WH SHIPPING: • Efficiency in delivery business • Has great deal from USPS and UPS
- 25. Question 3: Speaker 3: Thao Bui LEADING E-READER: • developed the Kindle • exclusives PRIME MEMBERSHIP: • Access deal earlier • discount on subscription • fast shipping • Unlimited stream
- 26. Summary Speaker 1: Robert Wise Amazon reinvests nearly all of it’s profits into growth. Some investors avoid Amazon because of it’s high P/E ratio. Amazon’s competitive advantage is sustainable. Difficult to compare to other companies due to diverse product line. (Walmart, Ebay, Microsoft, Barnes and Noble)
- 27. Quiz – Question #1 Which of the following is part of Amazon's mission statement? A. “Low everyday prices" B. "People, Saving Money, Living a Better Life" C. "People can find and discovery anything they might want to buy online" D. "Empower every person and every organization on the planet to achieve more"
- 28. Quiz – Question #1 Which of the following is part of Amazon's mission statement? A. "low everyday prices" B. "People, Saving Money, Living a Better Life" C. "People can find and discovery anything they might want to buy online" D. "Empower every person and every organization on the planet to achieve more"
- 29. Quiz – Question #2 True/False: Amazon is larger than Microsoft by reported 2015 annual revenue. A. True B. False
- 30. Quiz – Question #2 True/False: Amazon is larger than Microsoft by reported 2015 annual revenue. A. True B. False
- 31. Quiz – Question #3 Where is Amazon's headquarters located? A. Menlo Park, California B. New York City C. Seattle, Washington D. San Jose, California
- 32. Quiz – Question #3 Where is Amazon's headquarters located? A. Menlo Park, California B. New York City C. Seattle, Washington D. San Jose, California
- 33. Quiz – Question #4 Which of Porter's Five Forces most negatively affect Amazon's competitive strength? A. Bargaining power of supplier B. Bargaining power of buyer C. Threat of new entrant D. Threat of new substitute E. Rivalry amongst competitor
- 34. Quiz – Question #4 Which of Porter's Five Forces most negatively affect Amazon's competitive strength? A. Bargaining power of supplier B. Bargaining power of buyer C. Threat of new entrant D. Threat of new substitute E. Rivalry amongst competitor
- 35. Quiz – Question #5 Amazon's largest acquisition was? A. Zappos B. Shelfari C. Fabric D. Radio Sharck E. None of above
- 36. Quiz – Question #5 Amazon's largest acquisition was? A. Zappos B. Shelfari C. Fabric D. Radio Sharck E. None of above
- 37. Quiz – Question #6 How much do students pay for Amazon prime? A. $49 B. $59 C. $69 D. $79 E. $99
- 38. Quiz – Question #6 How much do students pay for Amazon prime? A. $49 B. $59 C. $69 D. $79 E. $99
- 40. Backup Slide – Amazon Business Model Originally conceived by Jeff Bezos on a napkin.
- 41. Backup Slide – Amazon’s Share of Online Sales in 2013
- 42. Backup Slide – Jeff Bezo’s Supports Not Taking Profits. Speaker 1: Robert Wise Amazon has perhaps 1% of the US retail market by value. Should it stop entering new categories and markets and instead take profit, and by extension leave those segments and markets for other companies? Or should it keep investing to sweep them into the platform? Jeff Bezos’s view is pretty clear: keep investing, because to take profit out of the business would be to waste the opportunity. He seems very happy to keep seizing new opportunities, creating new businesses, and using every last penny to do it.
Notes de l'éditeur
- Introduce ourselves.
- Amazon has a “mystery box” promotion during November. Customers would purchase a “video streaming mystery box” for $120 or a “SLR camera mystery box” for $300. Customers didn’t know what they were getting until it arrived. (the deals were usually better than average)
- Pass agenda handout to class. Approx. 40 copies.
- - This mission statement I believe is pretty broad and shows that Amazon is completely open to any new opportunities and Ideas.
- -Amazon was originally founded in a garage in Bellevue, Washington in 1994 by Jeff Bezos. The name Amazon was actually selected by Bezos by looking through the dictionary and settled on Amazon because it was a place that was exotic and different just as he planned for his store to be. - It is an American electronic commerce and cloud computing company with headquarters in Seattle, Washington. It is also the largest internet based retailer in the United States. - It originally started as an online bookstore and later diversified itself to sell DVDs , CDs, apparel, furniture, food and many other products you may find at a brick and mortar store. In the first two months of business, Amazon sold to all 50 states and over 45 countries. Within two months, Amazon’s sales were up to $20,000/week. - This is Amazon’s logotype and its featuring a curved arrow leading from A to Z, representing that the company carries every product from A to Z, with the arrow shaped like a smile.
- Some of Amazon’s products and services includes: - Retail goods: With its product line including several media, apparel, baby products, consumer electronics, beauty products, gourmet food, health and personal care items, and the list goes on and on … - One of its great services includes Amazon prime: Which is a membership offering free-two day shipping within the U.S on all eligible purchases for a flat annual fee of $99. As well as discounted one day shipping rates. -Consumer electronics -In September 2011, Amazon announced its entry into the tablet computer market by introducing the Kindle Fire, which runs a customized version of the operating system Android for now at a low price of only $49.99. -Prime Now In December of 2014, Amazon announced that as a benefit to prime members, parts of Manhattan, in New York city , could get products delivered to them within one hour for a fee of $7.99 or within two hours for no additional fee. 25,000 daily essential products are available with this delivery service. And now I will pass it on to Angela with the current news …
- Release Amazon Echo (Alexa) Play music, provide information, turn on light, heater At the Consumer Electronics Show 2016 in Las Vegas, Ford just announced a partnership with Amazon that will integrate its vehicles with Echo, the e-commerce company's smart-home device. That means that from the comfort of your living room, you could ask Amazon's Alexa to start your vehicle or to tell you how much charge your electric car has. Also, you could ask Alexa to open your garage as you're turning onto your street so you could cruise right in when you got home, or turn your porch lights on so you're greeted with a warm glow.
- AMZN stock is at $609 and has performed better than the market by nearly 200%.
- Larger than Microsoft and Target, but smaller than Apple and Walmart Amazon reinvests nearly all net income in growth and expansion. Net income is near $0 every year. Amazon has a P/E ratio of 341
- Larger than Microsoft and Target, but smaller than Apple and Walmart Amazon reinvests nearly all net income in growth and expansion. Net income is near $0 every year. Amazon has a P/E ratio of 341
- For comparison, Apple and Microsoft report net income of nearly 22% of sales. Retail sector has lower net income, 4% for Target, 3% for Walmart, but Amazon’s is near 0% (their business model shows all growth is reinvested).
- Another slide showing that Amazon’s revenue (and operating income) are growing exponentially, even though net income remains near zero.
- Supplier power: is driven by the number of key input, the uniqueness of products/services, cost of switching Buyer power: is driven by the number of buyers, the importance of each individual buyer to one’s business, cost of switching Threat of new entrant: the ability of people to enter the market Threat of substitution: the ability of your customers to find a different way of doing what you do Competitive rivalry: the number and capability of your competitors.
- Porter’s competitive structure indicate strong strength for Amazon. In the macro-economic sense, for the foreseeable future is continued expected profitability for Amazon.
- Target shipping is 3-5 days USPS delivers on Sunday for amazon only.
- Chart: amazon office space is growing exponentially
- Amazon Prime signing up more new members @ $99 than Costco is at $55.
- Macro: (plus) AMZN is not as sensitive to recession as other retailers due to low prices. (minus) AMZN is in many foreign markets and there is always a forex risk. Tech: (plus) AMZN is a top place to buy new tech so it benefits. (minus) sharing culture could someday cut into all retail sales. Political/Legal: (plus) AMZN has low taxes due to nearly zero NI. (minus) As a large corporation laws and regs always pose a threat to profits. (minus) when states passed laws requiring AMZN to charge sales tax, sales in those states went down 10%. Social: (minus) go green movements don’t like wasted packaging materials or gas used in shipping. (minus) hackers are always a threat to large online companies.
- Amazon is a competitor within various industries; Amazon's top competitors include EBay, Barnes & Noble, and Wal-Mart. For instance, Wal-Mart aim at offering their customers' the lowest prices available. EBay, is similar to Amazon in that consumers can go to the site to find anything they wanted and have it shipped right to their front door. Barnes and Noble also have an e-bookstore. However, Barnes and Noble do not offer the widespread selection of products that Amazon does. COST: Low-cost operations are the primary advantage that keeps it on top of its competitors. Amazon is doing is negotiating for space inside of supplier's existing warehouses. SHIPPING: Amazon has no physical stores, it has efficiency in the delivery business: 1. WH is around the country, so ship faster. Also, their robot work efficiently, rapidly, precisely. Has great deal from USPS and UPS that giving them a shipping edge
- Leading E reader: Amazon has developed its Kindle e-reader In 2007 As of today, the Kindle has access to the largest selection of books including over 630,000 titles. Amazon claims that the Kindle can carry up to 3,500 books wherever you go. Kindle ebook exclusives – become one of the most important advantages of using Amazon’s ebook platform. Dedicated Kindle devices and apps, a distinctive file format, and an aggressive low-price policy. Prime membership: 30-minute early access to Lightning Deals on Amazon, and can shop on MyHabit.com. unlimited streaming video, music. free same day, 1 day or 2-day shipping for a variety of products, in addition to borrowing a free Kindle book per month free of cost. Amazon also offers buying and renting of movies and TV-shows.