Report on Amazon’s Strategic Evaluation In order for a business to succeed, there is need for consistent strategic evaluation of the business operations and their outcomes. Only businesses that continue to appraisal their performance from several angles are able to thrive. This specifically so in the disruptive business environment of the 21st century. In attending to that necessity, the purpose of this report is to assess and report on Amazon’s strategic position using a variety of strategic tools. Part A—Amazon’s Strategy and Financial Analysis Mission statement The purpose and vision statements of Amazon.com Inc. direct the global technology and e-commerce Company toward success and long-term growth. The strict steps taken to guarantee that the vision and mission statements are met are credited with this achievement. The corporate mission statement conveys organizational goals and directs strategic management inside the corporation, whereas the corporate vision statement outlines organizational direction toward a desired future state of the business. Amazon's mission statement places a strong emphasis on customer satisfaction in light of this business analysis case (Amazon Inc, 2021). For instance, the business places a lot of emphasis on how happy target customers are that they can access a huge selection of products in the e-commerce industry. Business model After considering amazon’s customer centric mission, it becomes very easy to establish the firm’s value proposition. The business wants to make it as simple as possible for customers to make any kind of online purchase books, consumer products, groceries, gadgets, music, and even television and video material are all included (Osterwalder & Pigneur, 2010). Through the platform, one may find and purchase just about anything they would require (Amazon, 2022). By creating a platform where third-party merchants may list and sell their products directly to customers, they are aiming toward this, creating an online one stop shop (Ritala, Golnam, & Wegmann, 2014). Their sophisticated fulfillment network, which enables customers to receive their purchases in two days with no shipping fees, plays a part in establishing a customer-centric experience for Prime Members. The organizations value propositions are enshrined in the ability to offer low price products, fast delivery of purchased items, and a broad range of products to purchase from. In order to manage this scope of operations conveniently, amazon. To that effect, Amazon has also built its supply chain and distribution network to be as effective as possible. Opting use third party logistic companies that are good value for money. Amazon’s operations are also highly boosted by its specialization in artificial intelligence and big data management, which further increases efficiency and effectiveness (Manyika, et al., 2011). Figure 1: Amazon Business Model (Segarra, 2016) Financial statement analysis Amazon.com, Inc. (AMZN) is valued at a significant premium due to its track record of steady revenue growth. However, when employing earnings-based valuation techniques, it almost always appears to be wildly overvalued. The majority of Amazon's profits were reinvested back into the company as part of its plan. This tactic reduced taxes while enabling the company to grow more quickly. As a result, when used in relation to Amazon, conventional measures of value frequently fall short. To appropriately assess the disparity between market valuation and Amazon's business fundamentals, various valuation measures merit serious scrutiny. In the midst of the pandemic between 2020 and 2021 financial year, Amazon saw a growth in its profitability and its revenue (Amazon Inc, 2021). Because most physical spaces closed up Amazon found its handling the AWS sales increased quickly in the first year of the pandemic, growing 30% year over year ("YoY") in 2020 on a $35 billion yearly revenue base in 2019, but at a slower rate than the 37% YoY growth in 2019 (Amazon Inc, 2021). This was caused by a combination of factors, including our assistance in helping businesses reduce costs by optimizing their AWS footprint, including the uncertainty and sluggish demand that so many firms experienced. Companies were simultaneously taking a step back and deciding what they wanted to change as a result of the outbreak. Many decided to hasten their transition to the cloud after coming to the conclusion that they didn't want to continue managing their IT infrastructure alone. This change by numerous businesses assisted in revving up AWS's sales growth to 37% in 2021. This outstanding performance saw the growth of Amazon’s ROE from 22.8374 in 2020 to 24.134 in 2021. The company’s ROA also grew from 6.6 in 2020 to 7.93 in 2021, while the company’s ROI grew from 17.0 to 17.9 in 2021 (Macrotrends, 2022). Part B—Amazon’s Strategy Implementation and Balanced scorecard Competitive and business factors Amazon and its subsidiaries offer a wide range of product categories, services, and distribution methods. The global sector in which the company operates is continually changing and very competitive, and Amazon contends with a wide range of rivals from various industry sectors worldwide. Ones of amazon’s competitors both present and future are: (1) physical, online, and Retailers, vendors, manufacturers, distributors, and creators of the goods we provide and sell on omnichannel (2) Manufacturers, producers, and marketers of physical, digital, and interactive media of all kinds; and (3) Customers and Businesses; all routes of distribution only to name a few. Given the appearance of the corona pandemic, opportunities in the technology sector have increased, but so has the associated disruption, challenges and competition (Amazon Inc, 2021). Currently, one of the best multinational corporations is Amazon. The company dominates the e-commerce market and also runs successful businesses in other market segments. Customer focus, inventive cost leadership, a positive brand image, and most recently an abundance of resources are among Amazon's attributes that have contributed to its success. Despite these advantages, Amazon also has certain weaknesses, such as low profit margins, a business model that is simple to copy, previous product failures, a poor public image in some areas, and a weak organizational culture as demonstrated by employee pushback. Looking at these advantages and disadvantages, Amazon faces both numerous environmental prospects and dangers. The primary likelihoods for Amazon are the chance to keep up its market dominance, expanding its operations into new markets, strategic partnerships with other companies, growing its local presence, developing its own cryptocurrency, and enhancing corporate policies. Additionally, the company must get ready to deal with concerns including cyber security, escalating technological competition, cultural obstacles, regulatory difficulties, and geopolitical instability. The effective utilization of the company's greatest strengths while minimizing the negative effects of the weaknesses will determine Amazon's growth and sustainability, when considering all of these SWOT considerations (Segarra, 2016). Amazon Customer Analysis Like the wide variety of products that the company sells, amazon has a varied collection of customers from all over the world (Amazon Inc, 2021). The customers include individual consumers of its services, and enterprises seeking business solutions. Like it has been mentioned before, amazon is a customer centric firm, it is its effort to deliver the exact thing that the client wants when they want it and at the time they want it. All the new services that Amazon has introduced including Amazon Web Service such as AI solutions, streaming services (Goldstein, 2020). In the future, Amazon also contemplates its own currency. All of these products are meant improve Amazons ability to deliver a flawless experience to its consumers. Amazon’s Key Value Drivers According to Amazon’s financial reports the key revenue and profitability drivers are its three service categories namely AWS, Marketplace, and Prime are all examples of audacious investments made by Amazon that are paying off, and that having those three significant pillars is a boon to the firm. Amazon Web Services (also known as AWS) Amazon's cloud computing service was developed as a straightforward storage solution to support Amazon's online store. Since then, it has developed into a market leader in cloud computing, competing with Google, IBM, and Microsoft's Azure (MSFT) (GOOG). AWS, which began operating around ten years ago, is expanding quickly. In 2015, it produced a run rate of $10 billion in revenue, and in the first quarter of 2016, it increased operating margin by more than 50%. AWS is greater than Amazon.com was at the same age, according to the business (Segarra, 2016). Paid subscription to Amazon Prime includes access to streaming video services, music, and the option to check out books from the lending library for Kindle owners in addition to free two-day, same-day, and one- hour shipping. For Amazon's North American and international revenues, Amazon Prime is a critical growth engine. Amazon's International sector has benefited from the success of the Amazon Prime service in other nations. Following its success in Japan (EWJ) and the UK, the company intends to grow in other foreign countries. Marketplace was introduced by Amazon roughly 15 years ago. Millions of buyers might be reached through marketplace by third-party vendors who wanted to sell their goods. Amazon's gross margin is boosted by third-party sellers because they don't incur any product costs while receiving a fee from sales. As a result of the substantial gross margins generated by these transactions, this continues to be a significant source of revenue for Amazon. According to the corporation, third-party sellers sold nearly 50% of the units that were sold on Amazon.com in 2015 (Segarra, 2016). The corporation claims that as a result of vendors' inventory becoming eligible for prime, sales increase for them as well as Prime's users. Amazon’s Balanced Scorecard and Strategy Map During the period of the pandemic the business world became so extremely disrupted. Under such instability, Amazon Inc., has been very skeptical of passing setting confident targets through forward-looking statements. The firm has consistently chosen to be careful with its selection of words in its statements including words such as PERSPECTIVE Financial OBJECTIVE - Increase sales across Stores MEASURE - Number of unit sales TARGET - 33% and 40% - Reduce - variable cost Cost in dollars per unit per unit Customer - Improve - Online - Increase the customer customer amount of service experience time users Metrics spend on AWS Internal - Increase -cash flow in dollars operating cash - $3.0 billion and $6.5 billion, flow Learning and - growth Focus on - Presence of More women, investment in women, racial more innovation, diversity innovative Introduce new products diversity, engagement - products and services Amazon Inc., Strategy Map - Figure 2: Amazon Strategy Map (Segarra, 2016) Conclusion Consistent strategic examination of business operations and their results is necessary for a business to prosper. Businesses can only succeed if they continually evaluate their performance from a variety of perspectives. This is especially true in today's dynamic corporate environment. This report's goal was to evaluate Amazon's strategic position utilizing a number of strategic tools in order to meet that need. The report concludes that Amazon is still a very forceful corporation in the sector. However, due to a number of risk factors posing as threats in the environment, the firm needs to mobilize its resources and other strengths and continue to pursue opportunities competently. Amazon’s business model is an opportune one, however the firm must also realize that its strategy is easily imitable. References Amazon. (2022). Annual Report 2021. Amazon Inc. (2021). 2020 Annual Report. Amazon . Goldstein, J. (2020). Amazon Unveils Its New Gadgets and Features — Including a Flying Security Camera! Retrieved September 12, 2022, from https://people.com/humaninterest/amazon-unveils-new-2020-products-and-features/ Macrotrends. (2022). Amazon Financial Ratios for Analysis 2009-2022 | AMZN. Retrieved September 12, 2022, from Macrotrends: https://www.macrotrends.net/stocks/charts/AMZN/amazon/financial-ratios Manyika, J., Chui, M. B., Bughin, J., Dobbs, R., Roxburgh, C., & Byers, A. H. (2011). Big data: The next frontier for innovation, competition, and productivity. McKinsey Global Institute, 1-156. Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers. Hoboken: John Wiley & Sons. Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The case of Amazon.com. ndustrial Marketing Management, 43(2), 236-249. Segarra, A. (2016). A Framework for Boosting Revenue Incorporating Big Data. Journal of Innovation Management, 4(1), 39-68.
