Tag Archives: Amazon

AMAZON Business Strategy and Policy

Question

Implementation plan

For the final assignment of this course, you will continue your work with the company AMAZON. For

the Unit VIII Project, you will complete the final components of your implementation plan.

For Part 3, you will focus on the following points:internal and external issues,competition ,future outlook for the organization, and implementation of tools for measuring business success

Sample paper

AMAZON Business Strategy and Policy

The Amazon was founded in 1994 by Jeffery Bezos with a sole aim of exploiting the internet to reach more and more customers given the fact that the internet was increasing at a rapid phase. However, the company was at first focused on online bookstore, but as it grew it invested in other goods such as electrical appliances. Currently, the company is placed in top 100 lists of fortune companies, despite the ever growing competition in the online retailing business in the world today. However, the company has never fallen short of ideas, concepts, and strategies aimed at monitoring and developing plans that can put Amazon in the leading place in the global Internet retailing industry. This assignment will attempt to cover in details how Amazon can address issues such as internal and external challenges, competition and the future outlook of the company.

Internal and external issues

Just like any other company on the planet, Amazon faces some internal challenges due to the ideological differences between the employers and the employees. One of the internal issues facing the company is the organizational culture that seeks to satisfy customer’s needs and wants more than minding the welfare of the employees. The company has an organizational culture that enables business capacity to respond to the demands of the e-commerce market.  Despite the corporate culture of the company pioneering efforts in this type of online retail business, it imposes a strain on human resources. For the company to work efficiently and effectively, it has to find the balance between satisfying customers need and fulfilling objectives and goals of their employees (Ritala, 2014). Moreover, they should understand that monetary compensation is not the only reward employees are after despite being the major. On the other hand, legal issues are the main challenges facing the company given the fact that the company has to operate in different countries to fully satisfy their customers. Some countries around the world have strict rules and regulations for businesses making it even more difficult for online companies who are used to operate in the United States. Moreover, Amazon has to keep an eye on their products considering that customers and authorities in different regions are very keen because of product counterfeits.

Competition

To remain at the top of the charts and competitors, the company has invested in different brands that include media, electronics, and other merchandise. In the media segment, Amazon faces stiff competition from companies such as eBay, Netflix and Apple who are determined to win a large market share in the e-commerce industry. Additionally, the company has several competitors in the electronics and general merchandise segment that includes Best Buy, Family Dollar and Wal-Mart. However, given the fact that the company relies on their strong brands, extensive product mix, there is a high chance that it will succeed in putting off their customers and reaping maximum benefits from their business (Chou, 2016). It is worth noting that Amazon has the strongest brand in the online retail market, which is responsible for the rapid growth of the company and the extensive product mix makes it easy for customers to find what they need and want.  To be in a better competitive position, the company has to ensure they maintain the quality of their products and services to enhance customer loyalty as well as winning target market.

Future outlook of the organization

The company has a bright future to shape their organization and operations in the bid to be the best and a customer favorite in this industry. To achieve this, Amazon needs to roll out its online payment system that can help in addressing issues such as security and privacy concerns. With the rapid use of internet in the globe today, there is a risk of identity theft and cyber attacks if the company is not keen. By setting up an online payment system, there is a great chance that all transactions between the company and their customers will be discreet. Moreover, the company needs to show more concern for their employee’s welfare as a way of promoting their corporate culture and getting the best out of them. In addition, the company can capitalize on their strong brand to roll more products and services to reach to more and more customers.

Implementation of tools for measuring business success

As an investor, there is the need for the company to know their performance in the market by implementing measures of business success. The true measure of success is more that revenue and profits made by the company as it incorporates how much the management of the company learns about their clients, the business, and the company. To truly implement these measures, the management of the company needs to train and educate their employees on the importance of understanding their customers, the vision and mission statement of the company as well as its core values and their market (Kousha, 2016). Moreover, the company can also set up interaction platforms between employees and employers such as social platforms like Instagram and Facebook pages.

References

Chou, M. (2016). An Analysis of Buyers and Reviewers Community in Amazon. com Through                Wenger’s Domain-Practice-Community Framework.

Kousha, K. &. (2016). Can Amazon. com reviews help to assess the wider impacts of books?. .                Journal of the Association for Information Science and Technology, 67(3), , 566-581.

Ritala, P. G. (2014). Coopetition-based business models: The case of Amazon. com. Industrial                 Marketing Management, 43(2), , 236-249.

Safety and health issues in AMAZON

Question

Top three major safety and health issues in AMAZON, and write a policy on each, consistent with Occupational Safety &

Health Administration (OSHA) standards. There is a minimum requirement of 300 words for each of the three job policies.

Each of the five domains of OSHA must be considered when writing these three policies:

  1. Hazard communication: How will you notify people of potentially dangerous or unhealthy work conditions?
  2. Blood-borne pathogens: How will you protect employees from blood-borne pathogens such as AIDS?
  3. Personal protective equipment (PPE): What equipment or tools will your employees in this job require to work safely?
  1. Cumulative trauma disorders (CTDs): How will you prevent CTDs that come from repetitive movement (e.g., carpel tunnel syndrome)?
  1. Work assignments: How will you handle potentially dangerous work assignments, especially to protect unborn babies?

Sample paper

Safety and health issues in AMAZON

Just like any other company and organization, Amazon should put more emphasis on the safety and the health conditions of their work environment to ensure that they meet the international standards. Amazon is one of the American electronic commerce giants and the clouding company that has operated internationally since 1994. Statistics and research show that Amazon is the largest internet based retailer in the world today by total sales and market capitalization. Despite being a multinational company, Amazon has faced a lot of criticism in recent years, both from workers and in the general public regarding their health and safety measures especially after a reported series of deaths in their company. This assignment will focus on identifying and describing three major safety and health issues facing Amazon as a company.

Working from height

One of the major health and safety issue reported at the company is working from heights, including ladders and other raised areas. Given the fact that Amazon being an internet company deals with packaging and selling of electronics from their stores, they must have upper drawers and compartments where they store their trading goods. Apart from having tall storage facilities which can only be accessed through the use of ladders, the company also has a maintenance team that is responsible for ensuring that their facilities are in good condition by applying new color coats or ensuring that their electrical wiring is in good condition. All these workers who perform such kind of duties are at the risk of getting injured in case of misunderstanding or fall (Schulte, 2014). Statistics show that hazards associated with working at height can originate from lack of understanding between two working partners and accounts for 14% of all workplace accidents in the company. Employers may not know they need to provide their employees with fall protection equipment, or the fall protection gear may not be worn properly or not hooked to anything.

However, to help reduce the negative outcome of this hazard, there is the need for the management team to help train and communicate the hazards and safety measures necessary to work in such conditions and areas. The best and ideal way of communicating this information to the employee is word of mouth through their supervisors as well as handing them safety and health measure workbook to ensure that they read all the time necessary. In addition, the company needs to identify all locations where fall protection is necessary and equip all workers with personal protective equipment such as headgears and safety boots to reduce the effect of the damage for impact in case he or she falls from a raised ground while working. The company should put more emphasis on the well-being of the employees given the fact that labor and employee is one of the important assets that a company can ever own.

Unguarded machinery and moving machinery parts

Since its initiation, Amazon has seen several deaths in their facilities as a result of unguarded machinery and other work related hazards. However, in 2013, the company reported one of the saddest death stories of 57 years old male worker who was working sorting items for orders when he was caught by conveyor belt and dragged. Despite being taken to the hospital, Ronald Smith did not survive. It is worth noting that this is just an example of so many other death cases that has been reported in the facility due to extreme working conditions especially uncovered and guarded machines and machine parts (Brauer, 2016). Due to the high demand of the company work rate, employees are forced to work under pressure and at times are forced to take shortcuts which result in accidents.

To help prevent such accidents in the workplace, there is the need to cover all the machines and moving parts as well as providing safety gears. However, in the case of blood-borne pathogens, there is the need to train workers how to deal with infections such as AIDS by educating them in the best way they can avoid the infection and all they need to know about the disease.

Confined spaces

This is one of the most common safety issues that a company can experience. Amazon has suffered from this workplace assessment where they need to have special confined spaces for their equipment, and these accidents occur because the employer did not issue a permit or failed to carry out a risk assessment. Confined spaces are likely to result in cumulative trauma disorder that comes from repetitive movement and to address this issue; the company needs to develop a rotation plan where workers can be rotated from one department to another (Lundgren, 2013). Moreover, to handle potentially dangerous work assignment, especially to protect unborn babies is to ensure that expectant mothers are not assigned to perform duties that can endanger their lives or that of the child. Additionally, I can advise the mother on how to proceed cautiously to ensure that her life is not in danger and that her child is in good condition and healthy

References

Brauer, R. L. (2016). Safety and health for engineers. John Wiley & Sons.

Lundgren, R. E. (2013). Risk communication: A handbook for communicating environmental,                   safety, and health risks. John Wiley & Sons.

Schulte, P. A. (2014). Occupational safety and health criteria for responsible development of                   nanotechnology. . Journal of Nanoparticle Research, 16(1), , 1-1.

 

Case study of Amazon and Wal-Mart-Financial Statement & Data Analysis

Question

Select two companies operating in the same sector and download their latest annual reports (minimum year ending 2014). You must not select Thorntons plc.Financial statements must be prepared using International Financial Reporting Standard IFRS.References should follow the APA 6th Edition referencing system.

Sample paper

A comparative case study of Amazon and Wal-Mart-Financial Statement & Data Analysis

Introduction

Walmart and Amazon have been two competitive retail business company over the years. An analysis of the two companies over a ten-year horizon highlights Walmart on a better provision of value on its stocks than Amazon. It is in attribute to the uniform dividend payout and growth on its share price.

Over the forty years, Walmart has been in operation; its dividend payout has been increasing. Currently, its dividend yield is at 3.03 %. Its price earnings ratio which ranges between 13.3 -18.2 over past decades highlight share worth investing in the long term. Over the next two years, Walmart plans to put $2.5 B investment in employment and $ 2 B in the electronic commerce industry. The investment will have an adverse impact on it earning, although it will yield significant returns after the two years of operation. Walmart is highly resourceful not only on infrastructure but also capital. The customer outreach gets support from the buyer`s power and a management team that’s fully focused to grow the firm into a model combining brick-and-mortar store with the electronic commerce.

Amazon.inc has had incomparable triumph over the years, over the past decade the company has its share of ups and downs. From an investment perspective, the current investment strategies on international market investment and expansions programs such as Prime Now and Logistics have placed it in an attractive position on the market. The launch of Prime will cushion Amazon on its less yielding products such as Fire Phone and Amazon Destination. By the year 2020, Amazon is estimated to grow up to $46 B from its current position of $ 7B.

  1. BUSINESS MODEL

2.1 Walmart

 Walmart is placed in the market as a discounting retailing company operating chains of stores, supermarkets, warehouse and the famous Sam’s Club it also runs websites such as samsclub.com and Walmart.com. Its operations within the 27 countries are under different names, in the U.S it operates as Walmart and Asda in the UK, forming the major markets. On the minority market it operates in Seiyu located in Japan and India has Best Price. Operating over 11000 retail units and e-commerce platform it operates big within the retailer industry and employees a large group, a recognition earned over a long period in operation.

Its core strategy is to be a price leader, invest in differentiating on access, be competitive on assortment and deliver a great experience. Under the leadership of Doug McMillon as the current president Walmart upholds on its mission statement as a move for improving people live through enabling saving of money. It strategies on bringing its stores together, passing its everyday low cost to its customers as a control on its expenses

2.2 Amazon Inc.

Amazon has grown within the retail industry to become the world largest online retailer. The growth is attributed to its extension in the global presence and not only focusing its operation in North America. Within the marketplace, it operates websites such as amazon.com, in the UK as Amazon co.uk, Amazon.inc, amazon co.jp and Amazon de (Research, 2016). Amazon Company started as a book retailer operating online, diversifying into sale of other products and sales categories over the years and developing its business model along with its growth. Its inventory is maintained and sold through two platforms commission based platform on third party retailers and its online platform. Subscription within Amazon is through prime services as well as a small electronic product line. Prime offers a variety of content such as music, web series, and videos. It has also expanded its Logistics; it is in an aim to shrink its dependency on some operations

First trading shares in 1996 after establishment in the year 1994 by Jeff Bezos who is the current board chair and CEO of the company, later reincorporated in 1996. It holds a mission to become Earth`s most client-centric company. It is guided by its four core principles and aims at becoming a consumer-centric company. To achieve this, it improves its principles: a customer obsession, a passion for invention, an excellence commitment to its operations and thinking on the long term goal.

  1. Operating characteristics

    3.1     Revenue Outlook

Just marked its 20th anniversary Amazon has strategically gained a market share within the United States and in the UK and India as minority share contributors. Most of its investments go towards growth through raising of debt and utilization of retained earnings. The company since inspection has never released any dividends as it fails to focus its growth strategy on profits. In the fiscal year 2015 it generated $107.0 billion in sales. Of total revenue generated the North America share was $ 63.7 billion representing 59% of the total. The International market generated $35.4 billion at 33% of the total. The rest $7.9 billion a 7% share of the total was contributed by the Amazon Web Service (AWS) division. 2015 thus became the first year for Amazon to split its revenue segment share (Amazon., 2015).

Walmart-the world`s largest retailer during the fiscal year of 2015 with a revenue of $485.7 billion, comprising mainly of $482.23 billion net sales. The sales distributed among its major three segments: Walmart United States, Sam`s Club and the Walmart International, The U.S segment had net sales of $288.0 billion, Walmart International segment operating in 26 countries outside U.S has net sales worth $136.2 billion. The Sam`s club operating as a membership-only warehouse club and as samsclub.com contributed $58.0 billion of the net sales. The major segment contributing to its revenue includes Grocery at 56%, Health and Wellness segment at 11%, the Entertainment stood at 10%, Hardline and Apparel were at 16% and Home was at 7%. (Walmart, 2015) The company trades as “WMT.” at the (NYSE) New York Stock Exchange.

    3.2 Competitive factor

The two companies have grown within the years to a competitive market but still manage to be the two leading giants. Its brick and motor stores allows Walmart to stand out among competition and will continuously be the most preferential retail store for most homes.  There store to provide an attribute that beats Amazon in its retail market as customers get a physical experience permitting them to have a feel and touch of the products, immersed in brand experiences and sales contacts engagement. Moreover to the physical distribution through stores, Walmart is aggressively investing in e-commerce platforms and better customer experience through sales improvement, operations, and customer services. Through programs such as EDLP focusing commitment to price leadership and price philosophy which lowers prices to customers on a daily basis.  EDLC controls expenses thus saving on costs and passed to customers. Walmart distribution facilities consist of 102 operational self-owned, two under by third party operator’s ownership, six leased properties, and 24 under third party lease.

Amazon acknowledges competition from single entrance company to alliances. Walmart as a competitor falls on the online, offline and multichannel retailer. As on Amazon competitive edge are publishes on its online store, the web search engine along with social networks. In an aim to beat the competition, it’s in adoption of new and improved technologies which include search, web attributes and computing services infrastructure. Thus Amazon can lock in customers with potential and with restrictive terms, devote its technological resource on, structure, fulfillment, and adverse marketing.

3.3. Risk factor

The number one and most common factor faced by the two companies is on exchange loss. With both companies trading on the international market, the loss is inevitable. The retail industry is not limited to the local economic and political risk. Other risks within the industry include government regulation, business licensing and limited fulfillment and technology infrastructure. Walmart further in its 2015 report acknowledges that data and privacy risk, as well as supply chain and third party risk, may also affect the retail business operations.

4 Employees

Due to the seasonal factor Amazon employee’s dropped to 230,800 on full time during the 2015 financial year. To curb the falling employee number Amazon opted for independently contracted contractors and temporary personnel to supplement its workforce (Amazon., 2015). Employee relation with the company is maintained at a suitable level. Walmart has approximately 2.2 million employees worldwide. It also maintains a large number of associates in each operational year. The company maintains its relationship with its associates is good (Walmart, 2015).

  1. Investment strategies

Over the 2015 financial year, Walmart investors faced a dilemma due to the short-term investment strategy and adoption to environmental changes within the retail industry. On the same year, the company issued a negative guidance, highlighting unpredictable business performance merits, revenue was low as operational cost rose. The expenses increase was forecasted to be by $1.2 B and $1.5B in the fiscal year 2016 and 2017 respectively. Further disappointment on the Walmart investor was due to its additional capital expenditures of $ 23.4B on store improvement and a $2 B electronic commerce investment over the coming years since 2015. The investors got skeptic about the company’s future low-cost over the 2015 financial year selling the stocks they held causing a 40% stock loss of its value over the past years. Its strong basics and statement of financial position along with an enduring strategy well laid out by the management has enabled the company to become a compelling factor on a ten-year investment horizon. Currently, the company offers existing permission allowing value investors to purchase a premium dividend thus paying stock at a very lucrative price (Walmart, 2016).

Investments within Amazon are directed towards technological advancement.  The company believes that technological progress improves their customer interaction on the internet as speeds have improved as well as cutting down on processing costs.  To gain a larger market share the Amazon digital platform has provided a membership service with the inclusion of more than video streaming. The platform is a multi-product incorporating free shipping and two free delivery.

  1. Ratio Analysis

Profitability ratios

Measures the ability of the business to generate considerable profits from its shareholders, communicating the financial performance of the business. The gross profit margin ratio highlights the revenue as a percentage available to cover not only operations but also other expenditures, Amazon Gross profit stood at 33.04 % an improvement from 2014, while Walmart was at 24.58% which was a deterioration from 2014 financial year. Operating profit margin is calculated as operating income divided by revenue; Walmart had a higher operating profit at 5 .04% a drop from 2014 compared to 2 % for Amazon which was a growth from 2014 that was less than 1%. The Net profit margin is calculated as the net income as a factor of revenue, Amazon stood 0.56 % while Walmart was at 3.07% highlighting an almost stable margin on the net profit margin. The Return of Equity after tax stood at 18.24% for Walmart and 4.45% for Amazon, highlighting a wide margin between the two companies. Although Walmart had dropped 2% from the previous year, Amazon grew with the 2% from 2% on the previous year. The return on asset for Amazon stood at 0.91% while that of Walmart stood at 7.36%.

Conclusion

Walmart has potential to develop distribution centers and small integrated store hybrids reducing its costs on operations over coming years. Enabling Walmart competes against Amazon supply channel and vast networks on delivery providing closeness to clients. Amazon earning continue to shrink against Walmart’s revenue as it spends more on capital expenditure. Walmart further utilizes scale and price competitiveness to ease its transition into the multi-channel distribution. Defiantly Amazon needs to replicate Walmart model, transforming itself into a multi-channel retail distributor. As the two companies invest within the market will see a change in its profitability ratio as they grow their sales and revenues.

References

Amazon. (2015). Annual Report . . SEC Form 10-K, 1-78.

https://www.sec.gov/Archives/edgar/data/1018724/000101872416000172/amzn-20151231x10k.htm

Research, Z. I. (2016, Octomber 28). AMZN: AMAZON.COM INC Stock Quote & Analysis – Zacks.com. Retrieved from Zacks: http://www.zacks.com/stock/quote/AMZN

Walmart. (2015). Annual Report . S. E. C. form 10K, 14-16.

https://www.sec.gov/Archives/edgar/data/104169/000010416915000011/wmtform10-kx13115.htm

Walmart, I. (2016, Octomber 28). Walmart strategy drives growth and sustainable returns, Plans $20 billion share. Retrieved from Walmart, Inc., : http://news.walmart.com/news-archive/2015/10/14/walmart-strategy-drives-growth-andsustainable-returns-plans-20-billion-share-repurchase-program-over-two-years.

 

Appendices

Amazon Ratio calculation

Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 35,355 ÷ 107,006 = 33.04%

Operating profit margin = 100 × Income from operations ÷ Net sales
= 100 × 2,233 ÷ 107,006 = 2.09%

Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × 596 ÷ 107,006 = 0.56%

ROE = 100 × Net income (loss) ÷ Total stockholders’ equity
= 100 × 596 ÷ 13,384 = 4.45%

ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 596 ÷ 65,444 = 0.91%

Walmart ratio calculations

Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 117,630 ÷ 478,614 = 24.58%

Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 24,105 ÷ 478,614 = 5.04%

Net profit margin = 100 × Consolidated net income attributable to Walmart ÷ Net sales
= 100 × 14,694 ÷ 478,614 = 3.07%

ROE = 100 × Consolidated net income attributable to Walmart ÷ Total Walmart shareholders’ equity
= 100 × 14,694 ÷ 80,546 = 18.24%

ROA = 100 × Consolidated net income attributable to Walmart ÷ Total assets
= 100 × 14,694 ÷ 199,581 = 7.36%

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