| |
  


2004
Dustin Nadeau, Donatas Sumyla,
David Deprey and Jaime Rodriguez
Bus 411, April 2006
 



4
isting Condition 4 Analysis
± Amazon overview ± SWOT Matri

± Industry overview ± SPAC
4 istory, Key Facts, Goals and ± BCG
Objectives and Stock Information ± I matri

4 Amazon Proposed Vision and ± Grand Strategy Matri

Mission ± QSPM
4
ternal opportunities and threats 4 Possible strategies
± CPM 4 Recommendations
± F ± Strategic implementation and
4 Financial Ratios desired results
4 Internal strengths and ± Show Cost
weaknesses ± Annual objectives (goal) and
± IF polices
4 valuation Procedure
4 Current Update
 | 


4 Founded in 1994; Started selling books online and now
operate Web sites that offer various products and
services, which include: music, DVDs, videos,
electronics, camera and photography, clothing apparel,
shoes, etc.
4 Features include: one-click shopping, customer review
and e-mail order verification.
4 The company is in coalition with other retailers and offer
various new, refurbished, and used items in categories.
4 eadquarters is in Seattle (Washington) with an
additional office in Coffeyville, Kansas. It has si
global
websites to serve domestic customers in the US, the UK,
Germany, France, Japan and Canada
 (


4 Inde
Membership: S&P 500, S&P 1500, Super Comp
NASDAQ 100
4 Sector: Technology
4 Industry: Internet Software & Services
4 2002: Number 492 in the V
 500 list
4 Full Time mployees:7,800
4 The 57th most-valuable brand worldwide
4 2002: 31 millions active customers
4 Sales:
± First seven years: $0 => $3.2B
± 2002-2003: $3.93B => 5.26B
4 2004: revenues of $6.9 billion (growth of 31.5 from 2003 to
2004)
 ã
4 November 1994 C O Jeff Bezos and two associates set up shop in
a converted garage.
4 Founder and Bezos opened the virtual doors of Amazon.com's
online store in July 1995 and began selling public.
4 In May 1997 Amazon.com completed its initial public offering (IPO).
4 April 1998 the company acquired online bookstores in U.K. and
Germany (Bookpages and Telebuch): first international e
pansion
4 In 1999 the company launched its own auction site
4 In 2000 Amazon.com launched amazon.co.jp and amazon.fr (Japan
and France)
4 In 2002 e-commerce strategic alliances were performed with Virgin
and Office Depot.
4 In January 2003 announced the Free Super Saver Shipping
4 September 2003 launched new Sporting Good store.
 Acquisitions/
Partnerships
4 |
 : 4 Ö
:
± Bought 46% of 2


 
± ¢  
(April 1998, (1999)
Amazon.co.uk) ± Bought 50% of 
  (1999)
± 
 (Telebook) Inc. ± Gained a 1.7% stake in  
!

(April 1998, Amazon.co.de) " 
and formed a joint online
auction site (1999,
± Paid $200M to acquire  sothebys.amazon.com)

V ± Bought 35% of " 

 
 , and  (1999)

  (1999) ± Bought 49% of #
  (1999)
± Introduced  
; ± Offered a co-branded credit card
with 
 (1999)
Amazon.com¶s online mall
± Annouched plans to open a
(1999) Target store at www.amazon.com
(2001)
± Others partnered with:
¢

$% 
$%
¢


#
 (2001)
istorical Product Introduction and
Geographical Diversification
Company Structure
 | 
|
  
4 Trading on NASDAQ, ticker symbol AMZN.
4 IPO: 1997 ($18 per share)
4 Dividends have never been declared or paid on
the common stock.
4 Reason: arnings are retained to finance future
growth and therefore do not anticipate paying
any cash dividends in the foreseeable future.
4 The Company currently does not offer a Direct
Stock Purchase Plan.

Ö

Ö



  


The World Wide Web might have been built to support geek-speak,
but today it is used to transmit information anyone can understand. Aside
from possibly -mail and instant messaging, accessing online content is the
main reason most people use the Internet today. It is estimated that a billion
people around the world have some kind of Internet access, either at work
or at home, and most are going online to read the news, to get product
information or for multimedia entertainment.
Some of the largest content providers are Yahoo, MSN, and America
Online. Some other traditional media companies like Walt Disney Internet
Group operate some of the top destinations on the Web, such as
SPN.com and ABC News. With Internet access continuing to grow and
advertising rates stabilizing, online content is developing and e
panding on
several fronts. One of the most e
citing areas of development is streaming
audio and video content, which has become increasingly popular with the
rising use of broadband Internet connections. While sites run by online and
traditional media companies will most likely continue to command the lion's
share of audience and advertising revenue, there are some grass roots
efforts that are beginning to challenge that dominance.

!Ö"##

 
conomic Performance
Top Internet Retailing Sites in
terms of Unique Visitors
(Source: Media Matri
)
 $!%&



4 We seek to be arth's most customer-
centric company, where customers can
find and discover anything they might want
to buy online, and endeavor to offer
customers the lowest possible prices.
 ] 


4 Our vision is to be arth's most customer
centric company; to build a place where
people can come to find and discover
anything they might want to buy online.
  


4 The company¶s si
core values: customer
obsession, ownership, bias for action,
frugality, high hiring bar, and innovation.
The company motto: µWork ard, ave
Fun, and Make istory¶.
 Ö
]
4 To continue e
panding in all countries with
Internet access, while ma
imizing total
commitment in becoming the number one
company in Internet transactions.
 Ö
 
To continue to offer quality products and services
using the best technology available and at a
reasonable price. This results in highly loyal
customers, while maintaining shareholders interest
and company profits in mind. We also want to
e
pand geographically, increasing the number of
customers and to keep improving our main
competitive advantage - infrastructure. By working
hard and having fun we seek to offer the best
working environment to our employees, promoting
career opportunities, and to increase our
responsibility towards environment and the
society.
 K 
 $ 
 


4 OPPORTUNITI S:
- Construction of an e
tensive
community of buyers
- Positive changes in the business
model of the book market
- Internet ta
es prohibited by the
Internet Ta

Ta
Freedom
Freedom Act
Act (1998)
(1998) and
and
its e
tensions (2001 and 2003)
- Growth of internet users in the ne
t
five years, predominantly in the
international market
- -commerce e
pansion in Asia and
the Pacific
- Several product categories with high
penetration of retail on-line sales
- 13% jump of Latinos going online in
2003 in the US since 2001
4 TR ATS:
- eBay, Barnes & Nobles, and Wal-Mart
Wal-Mart
- Possible rejection to on-line sale in
international markets if new ta
es
(Value Added
Added ta
es:
ta
es: VAT)
VAT)ininproducts
products
are levied
- Population segment not targeted to
on-line sales due to their lack of
internet access
- Weak economic performance of
Germany and France in the last year
- Competition will increase due to the
low barriers to entry in the market:
offline companies are coming online
K
K 
2


 
'##(

AMZN = Amazon Inc.

BKS = Barnes & Noble Inc.
BAY = eBay Inc.
Industry = Internet Software & Services (Source: http://finance.yahoo.com)


Ö$
  Ö
  
 $
) 



4 STR NGTS:
- Strong brand name
* Large product selection
* Pricing policy with discounts
- Corporate culture
- igh quality management team
- Customer service support (ighest
score in 2002 American Customer
Satisfaction Inde
)
- Strong Infrastructure: ffective
automated distribution centers in the
US and overseas (Competitive
Advantage)
- Developed and upgraded technology:
software and hardware
- Pioneer in the syndicate selling on the
Web
- Two segments: B2C and B2B e-
commerce.
- In the process of building efficiencies of
scale
4 W AKN SS S:
- Lack of Spanish website version
(Latino and ispanic Americans are
the fastest-growing online ethnic
group)
- Low finance performance (high debt
level)
- Risk of introduction of wrong new
categories which could damage
company¶s brand
- Company¶s offered free shipping might
affect future financial outcome
- Certain products (high volume/weight)
have high shipping costs which could
confront with local offline retailers

K 
| (
*'##(

$$(
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+,| $
 Ö|K 
* Y a
is: - Financial Strength: +3
- nvironmental Stability: - 2 ü &
'() ,*|,K|*K]K
* X a
is: - Competitive Advantage: - 1 ü *
'(+
- Industry Strength: +6
 ¢


4 Operating Segments:
- ¢,2 = Books, Music, and
Video/DVD: Include retail
sales from the different
4 Operating Results:
± 

: www.amazon.com,
www.amazon.ca, and mail-order
catalogs.
websites and commissions ± 
 : www.amazon.co.uk,
-
- = lectronics, Tools, and www.amazon.de, www.amazon.fr,
Kitchen: Includes sales from and www.amazon.co.jp
www.amazon.com, mail-order
catalog sales, and
commissions
- 
 
 :
Includes all retail sales from
the international sites
- 
.

 : consists of
commissions, fees, and other
amounts earned from other
service business
 ¢



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- Market Development
- Market Penetration
- Product Development
- Backward Integration
- Concentric
Diversification
 | $
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 2
 
4

: K   )  ) )| 
 
4 
.:
± Introducing new product categories
±
panding to Central and South American markets
± Research and Development to increase the
innovation and quality of customer services provided
± Increasing marketing e
penditures in order to reach
new population segments and fastest growing trends
and tendencies
 )KÖK¢,| $
 $  
4 Objectives:
1. Increase net income by 5% in the first year and 15%
in the overall period of 3 years
4 Increase the net profit margin to 5%
4 Increase total revenue in Asian market by 30%
2. Decrease long±term debt
4 Use increased income to pay down long-term debt
4 Keep operating costs low (efficiencies of scales)
3. Create different website versions based on the five
most common language in Asian region
4. Focus marketing strategies on customer feedback to
find out what Asian customers tend to buy
 K$ 
4 Financial reports annually and quarterly if necessary
4 Customer feedback program
4 Top level management meetings to assure goals are
achieved
4 Determine corrective actions after the first year if
annual objectives weren¶t accomplished
 Š '##0'##"
4 2004
±
pansion in China (www.joyo.com) buying a
Chinese e-commerce website
± Debuted A9.com: company focused in researching
and building innovative technologies: ³


¢ / and ³V ¢ /
± 01


/feature
± Set up an online donation channel to American Red
Cross (Tsunami in the Indian Ocean)
4 2005
± Set up an online donation channel to American Red
Cross (Tsunami in the Indian Ocean)
 *  

4 http://finance.yahoo.com
4 2004 Amazon Inc. Annual Report
4   ' 




. To appear in ³e-commerce
management: te
t and cases´; by Sandeep Krishnamurthy (last
updated on September 27, 2002)
4 Strategic Management : Concepts and Cases (10th dition) by Fred
David. Prentice-all
4 Strategia e Sistemi di Pianificazione; -strategy: Il caso Amazon. By
Prof. Cassia and Fattore. Universita di Bergamo
4 www.altavista.com (images)
 Thank you!
4 Questions?
4 Comments?