Assignment # 2

Keeping in view the list of the entrepreneurs submitted to me. You have to evaluate and
provide details about the business model of the one of the entrepreneurs.

In order to get information about what is business model and it works. You can use the given
resources.

1) https://uk.video.search.yahoo.com/yhs/
search;_ylt=AwrJO1XDAYxfuwIA4BR3Bwx.;_ylu=Y29sbwMEcG9zAzIEdnRpZA
MEc2VjA3Nj?p=business+model&fr=yhs-Lkry-SF01&turl=https%3A%2F
%2Ftse4.mm.bing.net%2Fth%3Fid%3DOVP.phL2XuA-8IIz2ATC-n5YkQEsDh
%26amp%3Bpid%3DApi%26w%3D144%26h%3D77%26c%3D7&rurl=https%3A
%2F%2Fwww.youtube.com%2Fwatch%3Fv
%3DDL6myRFdC_g&tit=The+9+Most+Successful+Business+Models+Of+Today&
w=144&h=78&pos=4&vid=d9179a32777f942ddafcb2081e2afab5&sigr=bIKS_6Skk
LpK&sigt=4frjvjtnOweD&sigi=ZpqMEsE1FyYS&hspart=Lkry&hsimp=yhs-SF01
2) https://hbr.org/2015/01/what-is-a-business-model

A Business Model is a company’s core strategy in business to make profit. Model comprises
of the details of the products or services business plan to sell, target audience, strategy to sell,
policy of the business, and any anticipated expenses. The main purpose of this model is to
know that the product is enable to cover it cost and result into profit. It also describe how an
organization creates, deliver, and capture value in social, cultural and other contexts.
In this I would like to explain the business model of AMAZON in my context.

BUSINESS MODEL
AMAZON

Overview (Summary)

Amazon.com online retailer, manufacturer and web services provider that became the iconic
example of Electronic Commerce. Its headquarters are in Seattle, Washington. It was
famously started as a bookseller Following Bezos initial strategy the company quickly began
selling more than books. By 1999 the company was also selling consumer electronics, video
games, home improvement appliances and many more. In 2017 it became a physical retailer.
Today it is the world’s largest online market place. IT is considered as one of the Big Five
companies of U.S.

Company Description

Amazon.com engages in the provision of online retail shopping services. It operate through
the Following business segments. North America, International and Amazon Web Services
(AWS). The North America segment include the retail sale of the consumer products and
subscriptions through the websites such as www.amazon.com and www.amazon.ca .
Company mainly focus on cloud computing, e commerce, digital streaming and artificial
intelligence. Amazon is also referred as “One of the most influential economic and cultural
forces in the world” as well as the world most valuable brand. JEFF BEZOS is the founder
and the CEO of Amazon since 1994. Its headquarters are in Seattle, Washington. It has
dedicated market places for USA, UK, France, Ireland, Japan, Australia and many more. In
July 2020 number of its employees has been increased to the 1,000,000. While its revenue is
estimated at 280.5 billion USD in 2019. It is considered as the largest internet company by
revenue. It also has a publishing arm and a film studio. Although offering a broad range of
the products, it was Amazon.com service that gained its customer loyalty and ultimate
profitability. It has a personalization tool that recommend the products on the basis of the
customer previous purchasing history and data.

Organization and Management

Amazon organization structure can be classified as hierarchical. Senior management include

the three CEO’s and three vice presidents responsible for various vital aspects of the
business.
Amazon organizational structure has the following key features

1. Hierarchical corporate structure

Hierarchical structure at amazon is due to the immense size of the employees that are
1,000,000.

2. Flexibility of the business.

Amazon is highly flexible towards the frequent changes in external market. Moreover, the
largest retail company leads changes in external business environment. This is all because of
the visionary and efficient leadership by the founder and CEO of amazon Jeff Bezos.

3. Stability in the top management

Stability is one of the key features of Amazon success. It experiences a very little turnover
among its key players within last few years.
The group of directors and the executive officers are involved in all decision-making
processes ensuring that the company remains its positions in e-commerce. At the top
leadership level, Amazon.com has a chief finance officer in charge of all finance matters that
pertain to the company.

Services or Product Line

World’s largest online retailer has a wide range of products. Amazon product lines include
several media (books, DVDs, music CDs, videotapes, and software), apparel, baby
products, consumer electronics, beauty products, gourmet food, groceries, health and
personal-care items, industrial & scientific supplies, kitchen items, jewellery and watches,
lawn and garden items, musical instruments, sporting goods, tools, Kindle, Echo, Fire TV,
Alexa, Amazon Fresh, Amazon Prime, Fire Tables, Amazon Studio, Amazon Wireless,
Music Unlimited, automotive items and toys/games. It also has a personalization tool that
recommend the products to the customer on the basis of their history of purchase.
Marketing and Sales
Amazon Marketing is a set of actions to promote and sell the products on amazon. Amazon
marketing strategy can be defined in these four steps
Reach
Amazon initial business growth based on the detailed approach to the SEO and AdWords
targeting millions of key words.
Act
To create a simple experience through testing and learning.
Convert
Using the personalization tool to make relevant recommendations to the users
Engage
Amazon’s customer centric approach engage the customers.

Sales
ASR
The Amazon sales rank (ASR) provides an indication of the popularity of a product sold on
any Amazon locale. It is a relative indicator of popularity that is updated hourly. Effectively,
it is a "best sellers list" for the millions of products stocked by Amazon.

Multi-level Sales Strategy

Amazon employs a multi-level e-commerce strategy. Amazon started by focusing on

business-to-consumer relationships between itself and its customers and business-to-business
relationships between itself and its suppliers.

Sale Growth
For the past years there is an tremendous increase in the sale of amazon.
Reportedly there is 43.4% increase in North America sales and 33.5% worldwide revenue
growth. Online groceries tripled as the most of people do online grocery shopping which
increase the Amazon delivery capacity upto 160%.

SWOT Analysis of Amazon

The SWOT Analysis of Amazon identify all the Strengths, Weaknesses, Opportunities and
Threats that affect the company most.
Strengths

 Low cost structure

 The largest merchandise selection
 A huge number of third party selection
Weaknesses
 Imitable Business model
 Limited penetration in developing markets
 Limited brick-and-mortar presence

Opportunities
  Expansion in developing markets
 Expansion of brick-and-mortar business operations
 New partnerships with other firms, especially in developing
markets

Threats

 Aggressive competition with online and non-online firms

 Cybercrime
 Imitation of business model and products

Subsidiaries

Amazon owns over 40 subsidiaries that include

 Whole Foods Market

It is an American Supermarket chain exclusive for the foods without artificial preservatives,
colors, and flavors.

 Twitch
It is a live streaming platform for videos primarily for video gaming content.

 Souq
It is the largest e commerce platform in the Middle East.

 Shelfari
Amazon bought it in 2008 as social cataloguing website for books but later it emerged it
with google reads.

 Audible.com
It sells the digital audiobooks, radio and audio versions of newspaper and magazines.

 A9.com
It acquired it in 2009 to focus on the research and innovative technology

Supply Chain

Amazon first launched its distribution network in 1997 with two fulfilment centres in
Seattle and New Castle. Amazon has several types of distribution facilities such as
crossdock centres, fulfilment centres, sortation centres and delivery stations. There are 75
fulfilment centres and 25 sortation centres.

Responsibilities
Employees at Amazon are responsible for five basic tasks such as unpacking and
inspection of incoming goods, placing goods in storage and keep the record of their
storage location, to pick goods from computer recorded locations to make up an
individual shipment, sorting and packing orders, and shipping of the orders. Employees
can carry hand held computers that are connected with a centre based computer to know
the exact rate of their progress. Some warehouses of Amazon are partially automated with
systems built by them.

Finances

Amazon is primarily a retail site with sale revenue model. Amazon take a small
percentage of sale price of the goods that it sell through its website. It also allow the other
companies to advertise their product. For the fiscal year 2019 there was an increase of
30.9% in the revenue over the past fiscal year. Amazon market capitalization went over
US$1 trillion in February 2020. It all because of their rapid business expansion over the
past few years.

Financial Projections

Due to business expand nature and its efficient leadership, Amazon projected statements
shows that their sales will increase by 6to 8% from the year 2020. Operating Margin in
2021 would be 6.63% high as compared to year 2020. While in 2022 it would be 8.01%
as compared to 2020.