Amazon Analysis

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An E-Commerce Retailer

Foundations of Management
(MGMT 500-060)

Case Assignment 1

Amazon is an American electronic commerce company that has become an icon of internet business. Jeff Bezos founded the company in 1994 and launched it online in 1995 as an online bookstore. However, the logo soon became symbolic as they started to sell everything from A to Z. Time magazine names Bezos “1999 Person of the Year” and said, “Bezos’ vision of the online retailing universe was so complete, his site so elegant and appealing that it became from Day One the Point of reference for anyone who had anything to sell online.”

I.Strengths and Weaknesses
Strengths '' Amazon was built in Seattle, WA because it had a large pool of technical talent, little or no sales tax and close proximity to one of the largest book wholesalers. These three characteristics were conditions Bezos used in selecting a location and continue to be strengths to this day. Jeff Bezos has proven to be a charismatic leader who started out by insisting on hiring the brightest, most intelligent and versatile young people whom could share his vision and were willing to work to achieve it. By doing so, his company has created innovative software and programming that they have been able to patent. The company has proven itself flexible in an ever changing e-marketplace, going from selling books to selling everything including their own services. By far, their greatest strength is the successful achievement of their goal to provide the best customer service. According to the American Customer Satisfaction Index’s fourth-quarter 2007 survey, Amazon was the Customer Service leader among e-tailers. Customer Relationship Management (CRM) and Information Technology (IT) support Amazon's business strategy. The company carefully records data on customer buying behavior. This enables them to offer to an individual specific items, or bundles of items, based upon preferences demonstrated through purchases or items visited. Bezos stated “Personalization is like retreating to the time when you have a small-town merchant who got to know you, and they could help get you the right products. The right products can improve your life, and the wrong products detract from it. Before the era of mass merchandizing, it used to be that most things were personalized. The purpose of … customization is … you get the economies of mass merchandizing and the individuality of 100-years-ago merchandising. Another goal that turned into a strength for them is frugality; they are very operationally lean. Amazon is a huge global brand. It is recognizable because it was one of the original dotcoms, and it spent its first 5 years sacrificing profitability for market share. However, it has proven to be a profitable corporation.

| |Calendar Years Ended December 31, | |(In Millions) |2007 |2006 |2005 |2004 |2003 |2002 | |Net sales | $ 14,835 | $ 10,711 | $ 8,490 | $ 6,921 | $ 5,264 | $ 3,933 | |Cost of sales | 11,482 | 8,255 | 6,451 | 5,319 | 4,007 | 2,941 | |Gross profit |3,353 |2,456 |2,039 |1,602 |1,257 |992 |

Weaknesses - Labor relations has become a major distraction for Amazon as its distributions centers are looking to unionize and Amazon has come out against it. There are even allegations they laid off or intimidated workers looking to unionize. Due to the collapse of so many dotcom companies, it is critical that companies show security and stability. Amazon has made some costly moves; Toys-R-Us...
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