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Amazon Strategic Plan

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Amazon Strategic Plan

Executive Summary

During the course of this strategic plan, Amazon, Inc. (Amazon) and its processes and

strategies will be scrutinized. The firm's history, products, operations, vision and mission

statement, corporate values and culture, as well as the management team, will all be discussed

in detail. In order to evaluate Amazon's strengths and weaknesses, as well as its possibilities

and threats, the company will conduct a SWOT analysis. It will also assess the organization's

competitors, financial outlook and tactical options.

Company Overview

After Jeff Bezos founded Amazon.com, Inc. (Amazon) on July 5, 1994, the company

began operating in the garage of Bezos' family home, where the company continues to operate

today. Amazon is an online retailer and cloud computing firm that serves customers in over

sixty countries all over the world [Amand1]. Amazon sells anything from books to tiny

dwellings [Amand2]. AMZN is the ticker symbol for the company's stock on the NASDAQ

stock exchange, and it has truly defined online shopping via innovation and a commitment to
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the needs of its customers. Amazon has over 200 facilities throughout the world and employs

more than 560,000 people [Ama18]. Amazon has around 560,000 workers globally.

Company History

It wasn't long before Jeff Bezos realized that the Internet was exploding and that there

were bound to be economic prospects. Bezos became interested in online book sales after

investigating mail order companies. One of America's most prominent book wholesalers is

located in Seattle, so he left his work at a Wall Street business and relocated there with the

help of family and friends. When Amazon launched, it distributed books to all 50 states and

more than 45 countries in the first month of operation. Amazon has evolved tremendously

since its humble beginnings in the garage of Bezos' rented home in Seattle twenty-four years

ago and has genuinely changed online commerce. Amazon went public in 1997, making $54

million and closing at $23.50 on the day of its IPO [Kaw97] despite being a young firm

selling primarily books. After its initial public offering, Amazon's first-quarter revenue in

1997 increased by more than 16 million dollars, more than doubling its 1996 first-quarter

revenue. Investing $5,000 in the stock market in 1997 would return at least $2.4 million today

[She17].

Amazon began expanding its offerings in 1998 and is still adding new products and

services on a daily basis. Amazon's customers have access to the entire world at their

fingertips, and if they're a member of Amazon Prime, they can have it delivered to their

doorstep in two days. Amazon's Kindle e-book reader ushered in a new era of e-reading with

its introduction. For Amazon, the success of its Kindle and electronic book sales was a direct

result of stocking the new Kindle Store with over 90,000 titles (books, newspapers, and

magazines included). There are several notable inclusions to Amazon's product and service
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mix, including Amazon Web Services (AWS), Marketplace (where third-party sellers use

Amazon's platform to make sales), Alexa (the Echo Dot), FireTV stick, Prime Wardrobe, and

Whole Foods (an organic grocery store acquired in 2017).

There are now more than 200 nations where Amazon has specialist websites and

warehouses from the United States. Customers in India have signed up for Amazon Prime at a

higher rate than any other service extension. Although Amazon's primary goal is to satisfy its

customers, it is also concerned with helping small businesses flourish and strengthening its

long-term viability [Ama18].

Products and Services

Amazon offers a diverse assortment of products and services from which to pick. Jeff

Bezos has built a company that caters to a wide range of customers, offering everything from

e-commerce to television programs to home services. [...] Amazon offers a variety of services

such as Amazon Destinations, Amazon Go, Amazon Game Studios, Amazon Art, Amazon

Drive, private label fashion and grocery items, Amazon Studios, Amazon Publishing, Amazon

Smile and Amazon Dash, Amazon Ticket, STEM Club, and the Handmade By Amazon

marketplace.
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E-commerce. Over the years, Amazon's website has grown to include a diverse range

of products, from books and CDs to electronic devices and clothing, baby products and

household goods to gourmet foods and groceries, health products and personal care items to

tools and sporting goods, as well as toys and musical instruments. The website has a host of

other functions that are supplied by Amazon. Customers can interact with local service

providers through Amazon Home Services, as well as through Amazon Marketplace, as well

as through Amazon Pantry and Amazon Fresh. Amazon Home Services, Amazon

Marketplace, Amazon Pantry, and Amazon Fresh are all services that cater to the consumer in

different ways.

Online retailer Amazon has a program called Prime. Amazon Prime is a

subscription-based service introduced in 2005 and offers subscribers a variety of benefits. For

the time being, the annual membership fee is $119, or $59 for students. In addition to free

two-day shipping on a wide range of eligible products, Amazon Prime is a significant selling

point. Prime now customers in specific zip codes can get their orders delivered the same day,

the next day, or even the hour (Prime Now). Prime Pantry is also available to members.

Additionally, Prime members have early access to flash deals as well as Kindle privileges,

exclusive discounts, Prime Video (unlimited streaming of movies and TV episodes), Prime

Music (unlimited access to Prime Playlists and songs), and Prime Photo (unlimited access)

(unlimited photo storage in the Amazon Cloud Drive). Like on Black Friday, Prime Day was

created to commemorate Amazon's tenth anniversary and offer exclusive discounts to Prime

members. To share their membership with another adult in the same household, Prime users

can create an Amazon Household [Hon18]. There are more than 100 million Prime members

globally, according to Amazon's Annual Report for 2017. Without considering free trials and
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student accounts [Ama18], this amounts to roughly $12 billion in revenue a year. Prime

members can get 5% back on all purchases made on Amazon.com with the Amazon Prime

Rewards Visa Signature Card, launched in 2017 in partnership with Chase [Amand].

Electronics for the home. Electronics are also available to customers through

Amazon. Customers may download books from the Kindle shop in seconds using the e-reader

line, which includes models priced from $80 (Kindle) to $280 (Kindle Oasis). Customers can

also choose from Amazon's tablet computers, including the Kindle Fire, Kindle Fire HD, and

the Kindle Fire Kids Edition. With Amazon Fire TV, customers may access content on

Amazon's streaming service and third-party services like Netflix and Hulu. Their Fire TV

product line has grown to include multiple devices. Amazon also debuted the Fire TV system

in the same year and expanded the Echo line with a few different priced alternatives.

EXCLUSIVE: Echo is Amazon's speech-activated speaker that can do everything from play

music to operate your Fire TV using voice commands.

Amazon's web-based services. Its AWS service provides a "wide set of global cloud-

based solutions encompassing compute, storage, databases, analytics, networking, mobile,

developer tools, management tools, IoT, security, as well as enterprise applications" [Amand]

AWS accounts for a sizable chunk of Amazon's annual income, and it's just becoming bigger.

To name just a few, AWS is used by well-known organizations such as Intuit, Airbnb, Zulily,

Comcast, Shutterfly, Expedia, Kellogg's, PBS, and Penn State.

Whole foods. Amazon paid $13.7 billion buying Whole Foods Market at the end of

last year. Amazon began slashing pricing in locations and selling Whole Foods products on

Amazon.com as soon as it acquired the company. As a result of the discontinuation of Whole

Foods' former rewards program, Amazon Prime members now receive discounts at the store.
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A new benefit for Amazon Prime credit card customers is 5% cashback at Whole Foods, in

addition to the 5% already offered on Amazon.com purchases. Whole Foods also brought a

variety of electronic devices to their stores, allowing customers to test out the products before

making a final selection. After purchasing Whole Foods, Amazon has a lot of options in the

supermarket and retail businesses.

Operations

Amazon's global operations are spread out among several fulfillment centers, a vast

logistics and delivery network, the company's headquarters in Seattle, and numerous brick-

and-mortar locations, including the recently purchased Whole Foods. Amazon's operational

aims revolve around making their operations as efficient and cost-effective as possible to suit

the needs of their stakeholders [Amand]. People and organizations interested in Amazon's

success are called Amazon's stakeholders [Qat14]. Research & development, new product and

service development, acquisitions in other countries, and updates to existing products and

services are all funded by Amazon.

Research and development activities are not monitored separately from improving

existing items in a recent SEC interaction with Amazon. Unlike other corporations, Amazon
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doesn't separate the two. To be successful at Amazon, it is expected that all employees will

"create and simplify" continuously for all products and services, whether they are already on

the market or not [Rey21]. Amazon's research and development strategy are critical to the

company's ability to accomplish operational objectives while also remaining one of the

world's most inventive businesses.

Because of Amazon's relentless pursuit of bettering its products and services for its

customers and other stakeholders, the company continues to grow its share of the market.

Increased revenue and brand loyalty are generated every time Amazon improves the online

buying experience a little. Furthermore, Amazon's business strategy includes geographical

expansion into new areas, such as emerging markets. Amazon's operating aims include a focus

on sustainability. Amazon has established multiple wind farms and solar projects across the

United States due to its commitment to using only renewable energy sources to power the

company's global infrastructure. Success for Amazon is based on operational strategies that

put stakeholders' interests at the forefront of everything they do.

Vision & Mission Statement

As far as Amazon is concerned, its vision and mission statements are inextricably

linked, and they have remained intact from the company's creation, which occurred in 1994.

'To be Customer - centric company organization, where customers can locate and discover

anything they could wish to buy online' is how [Amand] describes the company's goal and

mission: "to be the lowest-cost provider on the planet, where customers can locate and

discover whatever they could wish to buy online." In his mind for more than two decades, Jeff

Bezos envisioned a successful e-commerce company that did more than just sell books. His

idea for the company, which was established in the early 1990s, was a driving force behind its
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creation. A mission statement is used by an organization to express the rationale for the

organization's existence as well as how the organization intends to contribute to society.

A vision statement, on the other hand, defines what the organization hopes to

accomplish in its future initiatives. [Mas16]. A vision statement is a statement used by an

organization to represent the reason for the organization's existence as well as how the

organization intends to contribute to society. With a single announcement for Amazon, Bezos

accomplishes both of these goals at the same time with great success and panache. Bezos

established a precedent with this statement, and the precedent has evolved in tandem with the

company as new products and services are added to its already extensive portfolio. It does not

mention any other stakeholders, but it establishes a standard for anyone who has invested in

companies: that these stakeholders should be confident in Amazon's commitment to being the

best in the world, and that any stakeholder should feel honored to have made an investment in

a company. One fault in the assumption is that it only refers to online purchases, despite the

fact that Amazon has recently opened or acquired a large number of physical stores, which

creates a conundrum.

Corporate Values & Culture

Customer service is at the heart of Amazon's mission statement, which states that the

corporation is "customer-centric." Customers are obsessed with Amazon, and this term is the

first in a series of Leadership Values that govern the company's operations and corporate

culture. Every time, Amazon believes that the best way to establish and retain consumer trust

is to start with the customer. This is part of the company's continual endeavor to build and

maintain consumer trust. Besides being engaged in learning and self-improvement, other

company traits include raising the bar with each new hire and promotion, never accepting low
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expectations, being frugal, and fighting any action that may harm the firm's mission and

principles. At Amazon, the company's leadership and employees are urged to take ownership

of their personal goals and commitments, as well as the roles and objectives of the entire

organization [Amand2].Over the past twenty-four years, Bezos has fostered an environment

of ingenuity and self-sufficiency among his staff, resulting in a culture of invention and

growth within the corporation.

Strength, Weaknesses, Opportunities, & Threats (SWOT) Analysis

Strengths. As the most dominating brand in online purchase with the broadest

geographic reach, Amazon enjoys a considerable competitive edge over its competitors. This

is one of the most significant competitive advantages that Amazon possesses. As a result of

creating unique websites for each country in which the company operates, Amazon improves

the purchasing experience for consumers while also boosting the brand's power. Amazon

caters to distinct geographic needs while also strengthening the brand's strength. [Ama18] An

further quality that Amazon may attribute to its success is the combination of a diverse

product mix and a high inventory turnover ratio, which the company will continue to apply in

future projects. In addition, as the company with the highest revenues in the industry, Amazon
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may be able to invest more money in the future than its competitors as a result of its dominant

position in the marketplace.

Weaknesses. While a firm of this magnitude has many advantages, the sheer size of

the organization necessitates the dissemination of information to employees about the

numerous disadvantages that have been observed. One of Amazon's weaknesses is that its

business plan is straightforward and can be easily copied by other companies, despite the fact

that this is one of its most significant benefits. Any firm, such as Amazon, might launch a

website that sells a diverse selection of products in a manner similar to Amazon.com. Another

issue that Amazon should be mindful of as they move forward is the significant increase in

long-term debt that the company has accumulated over the past year, which is most likely tied

to their acquisition of Whole Foods. 2017 marked a 221 percent increase in Amazon's long-

term debt over the previous year's record of $7.7 million [Ama18], resulting in a $24.7 million

increase in long-term debt. Amazon's profitability is expected to suffer in the future as a result

of this big increase in interest payments, which has resulted in a significant increase in interest

expenses. In addition, as the industry continues to expand and flourish at a quick pace

throughout the world, it places a huge strain on the company's management, operational

systems, and human resources. This is a problem that Amazon must fix as soon as possible, if

at all possible.

Opportunities. Amazon has a slew of options to broaden the company's reach in the

future. If Amazon wants to grow its consumer base, it needs to branch out into new and

growing markets. A competitive advantage [Bar16] will be provided to Amazon if it is able to

establish a presence in developing markets before competitors do so. Amazon will be able to

expand its brick-and-mortar commercial footprint as a result of its acquisition of Whole Foods
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Market. According to the corporation, by progressively increasing the number of Amazon-

branded products available in Whole Foods Market stores, Amazon may increase income

while also strengthening their brand. The development of Amazon Go stores offers the

corporation with an opportunity to strengthen its competitiveness. Finallys, due of the fast-

growing nature of online retail in the United States, Amazon has a great opportunity to further

extend its e-commerce presence [Acc18] and become even more successful.

Threats. Among the dangers that Amazon faces are challenges from competitors in

both local and worldwide markets, with the most significant of these being the threat posed by

Amazon's own competitors in both domestic and international markets, which is the most

serious of these. Increasing Amazon's marketing efforts is necessary in order for the company

to remain competitive, while other huge retail firms continue to strengthen their online

shopping operations. Increasing labor expenses are also a source of concern for Amazon,

which, given the company's massive workforce of more than 560,000 employees, has the

potential to have a substantial impact on the company's cost structure. Cybercriminals

regularly attack online shops, such as Amazon, in order to steal money. It is essential for

Amazon to maintain a high degree of awareness in order to protect its network system from

hostile attacks on the internet.

Competition

Amazon is up against the stiff competition in every industry because of its size.

Amazon's retail rivals include Best Buy, Target, Walmart, Family Dollar, Big Lots,

RadioShack, and online retailers like Amazon. Target and Walmart are putting a lot of effort
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into developing their websites to compete more effectively with Amazon.com. There are a

number of other streaming services that compete with Amazon. These include NetFlix, Apple

(iTunes), Time Warner Cable (Play Store), and Google (Play). Amazon's AWS division, which

generates the bulk of the company's revenue, faces competition from rival cloud computing

businesses. Amazon faces a significant threat from Oracle, Alphabet, Inc., and International

Business Machines Corp. (IBM), which are all heavily investing in their cloud platforms.

ManagementTeam/Leadership

Jeff Bezos, Amazon's founder, and CEO is currently the richest person in the United States

and the first individual to make it to the top of Forbes' list with a fortune of more than $1

billion. [Kro18]. An alumnus of Princeton, Jeff Bezos left a successful Wall Street investment

management business to found Amazon.com, Incorporated, the world's largest online retailer.

The idea of Amazon founder Jeff Bezos has transformed the online retail business and made

him a multi-billionaire. As a company, Amazon has acquired a number of companies,

including Zappos.com and Whole Foods. (See [Fre18] in Appendix A.) Even though Jeff

Bezos is worth over $100 billion, he has grown Amazon's revenues from a million dollars in

the first year to over 177 billion dollars in 2017 [Ama18] In his letter to shareholders in

Amazon's 2017 Annual Report, CEO Jeff Bezos noted that "the one thing (he loves) about

consumers is that they are supremely dissatisfied" [Ama18]. This statement and the comments

that followed reflect his ever-present expectation that his employees constantly rise to meet

customer needs and always set a high standard for themselves rather than for Amazon.com.

Bezos and Amazon have achieved their current success as a result of their visionary

management style. Amazon's Leadership Principles [Amand2] demonstrate that Bezos holds

himself and the company's top executives to a high standard.

Financial Outlook

Because it has grown from a low-margin online store to a multi-billion dollar company

that makes money from online sales, cloud computing, advertising, and a variety of

subscription services, the future of Amazon seem bright. Despite Amazon's long history of

losses in the low-margin online sales industry, Bezos has shown that the company's other parts

can and will generate more profits. There are no short-term profits or Wall Street reactions for

Bezos to make judgments on, and the Amazon CEO continues to underscore this to

shareholders. [Ama18].

After the release of Amazon's 2017 Annual Report, which showed record-breaking

sales for the corporation, stock prices rose. On June 26, 2017, the S& P 500's price was

$993.98. Today, it is $1,715.67. (June 22, 2018). There is an Appendix B, [Yah18]. In the

future, as Bezos leads Amazon into new successful endeavors, the company's financial results

will continue to improve.

Strategies

During the past year, Amazon's business plan has been to increase the number of

products available on the site, expand into new international markets, and expand into other

areas of the company's business. Cost leadership is Amazon's online retail sales approach.

Amazon's goal is to reduce operating expenses as much as possible and then pass the savings

on to the customer. When Amazon purchased a robotics company (now known as Amazon

Robotics), they increased their efficiency and reduced expenses by installing more than

100,000 robots in its warehouses around the world [Win17].

To expand, Amazon relies on various tactics, including market expansion, market

penetration, and product innovation. Customers from every corner of the globe are becoming

part of Amazon's client base as the company expands its reach. Amazon needs to create new

retail sites tailored to the specific demands of the new country. Still, with the same rewards

and simplicity of shopping, Amazon has always offered its customers. The growing demand

for consumers to purchase goods online is driving Amazon's extensive market penetration.

Amazon's strong brand implies that its sales increase as the online sales market grows.

Amazon can maintain and grow its client base by providing an easy-to-use website with a

large assortment, excellent customer service, and affordable costs [Kot04]. Finally, new

products are being developed in all sectors. Amazon's long-term strategy relies heavily on its

business.

Every day, Amazon improves and acquires new products and services to keep up with

the ever-changing needs of their customers.

Conclusion

"Customer-centric company" was Jeff Bezos' goal when he founded Amazon 24 years

ago. He has done just that throughout the years, transforming Amazon from a simple online

bookstore into a sprawling empire of businesses all focused on the customer. In order to

ensure that Amazon remains customer-focused as it expands internationally and buys and

develops business divisions and organizations, Amazon CEO Jeff Bezos will continue holding

his company to high standards. We should expect Amazon's retail revolution to continue for

many years to come, following its foundation in 1994.

References

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