How Globalization and Technology Changes Have Impacted Amazon Company
Amazon.com, Inc. was founded by Jeff Bezos out of his own garage in July 1994 under the name of Cadabra. It went online in as Amazon.com in 1995. Since that time it has never looked back and is now the world's largest online retailer. It is an American multinational electronic commerce company with headquarters in Seattle, Washington, United States. With a total revenue of US$ 61.09 billion, it has a total of 88,400 employees as of December, 2012. It would be virtually impossible for a new company to reach the magnitude of inventory and status that Amazon maintains. When visiting Amazon, the number of products and services it offers is mind-blowing. Amazon has been in the internet marketplace for about thirteen years now; it would be extremely difficult for a start-up company in the industry to raise enough capital to even compete with Amazon on a lower level.
Amazon.com based in Washington and found by Jeff Bezos in 1994 is global leader in e-commerce and it was the first company to introduce the concept of selling goods on the Internet. Initially Amazon.com started as an online bookstore and its success led Amazon to diversify into other products such as gifts, music, electronics, groceries, toys and many more. Probably today there is no product that Amazon.com doesn’t sell. Amazon.com has developed different internet portal sites for different countries such as Canada, UK, Germany, France, China and Japan. Amazon.com was named after world’s largest river Amazon and was assigned with a logo of an arrow starting from A to Z representing the customer satisfaction as the highest priority and fill their store houses with every product in the alphabet. Amazon.com was open for trading under NASDAQ with a symbol AMZN for the first time on 15 may, 1997 by issuing initial public offering at a price of US $ 18/share. Amazon.com in its early stages was not very successful and did not produce any profits, which made investors rethink about their portfolio, major business and process restructuring was required; they had to cut down their costs to increase the profits and were tied up from diversifying into more products, however Amazon.com survived the “dot com bubble” in 2000 which was the core reason for many e- businesses to close down and this was the turning point for Amazon.com after which they finally in the fourth quarter, 2001 they made their first profit which generated revenues of more than a billion$ and $ 5million profits in just 1 quarter. This led Amazon.com to prove to the world that their business model was profitable and also they popularized online shopping which was recognized by time magazine and awarded Jeff as the business person of the year.PESTEL factors indicate attractive global market to be exploited by Amazon.com. Asian markets have reflected tremendous growth opportunities in recent past. Advancement and usage of internet for social networking has led to new opportunities to be exploited. Amazon.com should support environment friendly actions as increased importance is been given to environment these days, also to be a true global company Amazon.com has to incorporate single global strategy which involves legalities common to all of the globe. The graph below shows the dominance of Amazon.com sector wise. The balloon shows of all the business done by amazon.com majority has been in internet retailing; direct selling, vending and home shopping is almost void. This reflects the influence of internet on the business of Amazon.com. It is also seen below emerging markets and present markets where currently Amazon.com has its presence. Of all the retail sales value Amazon.com holds a very small share but then future trends look brighter as the CAGR expected is highest in India by 2011. This lays a pathway to Amazon.com as to establish themselves without any delay in India. Amazon.com should seek ways to sell products to customers with less havoc, instantly and securely as they did in text message selling without internet. In order to achieve this they need to have high end technical skills. Recently released kindle can also be used as a tool to increase the download sales.
The SWOT analysis could have given the group the opportunity to have an external worldview of the company and judge it in the bigger scheme of things. One way to do this is to know more about the various stakeholders in a particular industry. More importantly it is imperative to find out the “power and legitimacy” of the various stakeholders (Mitchell, Agle, & Wood, 1997, p.91). But the group members decided to devote little effort in this regard. When the group decided to look into the opportunities and threats components of the SWOT analysis there was not much external analysis that was undertaken. In fact, the group was contented in providing generalizations and at times provided assertions that were not backed up by evidence. If there was indeed evidence to back up their claim this was not discussed extensively in the report. In the part where the group discussed about opportunities and threats there was still no detailed discussion as to the effect of competitors and other external factors to the company. The impact of 9/11 terror attacks was briefly mentioned but it is an event that affected everyone not only Amazon.com but also its competitors. It does not provide any significant information with regards to the success of the company compared to its competitors and other forces acting on it. The group should have also discussed the importance of core competencies “the collective learning in the organization” (Prahalad & Hamel, 1990, p.32). It has to be reiterated that certain weaknesses in the collaborative analysis make it appear as if there are contradictions in the report. For instance, in the conclusion part, the group seems to imply that Amazon.com need not worry with any impending problem in the future. However, in the SWOT analysis it also says that there is a host of e-commerce sites springing ready to challenge the reign of Amazon.com. It was also mentioned earlier that the website for this particular company has proven to be stable and secure. But in the SWOT analysis it also states there that the company is susceptible to hacking. These are contradictory statement. It is troubling to find these kinds of statements because those who may read this report may conclude that the group is making generalizations without having the ability to prove their claim. It is possible however that there is an explanation to these seemingly confusing statements but the group has to revisit the report and explain it in a much better way. The group has to clarify why they say that the company’s website is secure and yet susceptible to hacking. The group has to explain even further why the company is profitable and sustainable and yet it is threatened by new e-commerce sites.
In summary, the multiyear run for Amazon shares has been phenomenal. The company made its stock market debut in 1997, and $100 invested then would have turned into six figures. Amazon has significantly outperformed the S&P 500 over the last several decades, but it has been a rocky road at times. In particular, Amazon lost more than 90% of its value when the dotcom bubble crashed. Past returns are clearly not indicative of future results. Amazon's strong performance during the 2020 bear market is a sign that the company is maturing. The thousandfold return available to early investors in Amazon simply cannot be repeated. Without hyperinflation, a trillion-dollar company will never be worth a quadrillion dollars because that is more than the combined value of every stock market in the world.
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Mitchell, R. K., B. R. Agle, & D.I. Wood (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. Academy of Management Review. 22(4): 853–886.
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