Amazon.com Business Combinations and Financial Results Analysis
1. Examine how at least three (3) growth strategy alternatives utilized by Amazon.com in the global and domestic retail markets influenced profitability, and indicate if the strategies were successful.
Amazon.com has a bunch of growth strategies in place. Their number one strategy is the fact that they start with the customer and work their way backwards. To them as a company they live by what all companies should live by – customer satisfaction is their number one goal. Amazon.com themselves even said that even if that makes third-party sellers angry about low-priority placements (James). Another one of their strategies is instant gratification. The way they are pursuing this strategy is by keeping up with their Kindle device that they created. Through kindles, customers can instantly buy a book, instantly download music, and instantly watch a movie on demand. With customers being able to do all this instantly, it makes them want to come back when they need more books, music, and movies.
2. Assess the financial value of the acquisitions and investments made by Amazon.com, and the influence of the acquisitions and investments on profitability during the accounting period.
2013 Acquisition Activity
In 2013, we acquired several companies in cash transactions for an aggregate purchase price of $195 million, resulting in goodwill of $103 million and acquired intangible assets of $83 million. The primary reasons for these acquisitions were to expand our customer base and sales channels and to obtain certain technologies to be used in product development. We determined the estimated fair value of identifiable intangible assets acquired primarily by using the income and cost approaches. These assets are included within “Other assets” on our consolidated balance sheets and are being amortized to operating expenses on a straight-line or accelerated basis over their estimated useful lives. Acquisition-related costs were expensed as incurred and were not
Amazon.com has a bunch of growth strategies in place. Their number one strategy is the fact that they start with the customer and work their way backwards. To them as a company they live by what all companies should live by – customer satisfaction is their number one goal. Amazon.com themselves even said that even if that makes third-party sellers angry about low-priority placements (James). Another one of their strategies is instant gratification. The way they are pursuing this strategy is by keeping up with their Kindle device that they created. Through kindles, customers can instantly buy a book, instantly download music, and instantly watch a movie on demand. With customers being able to do all this instantly, it makes them want to come back when they need more books, music, and movies.
2. Assess the financial value of the acquisitions and investments made by Amazon.com, and the influence of the acquisitions and investments on profitability during the accounting period.
2013 Acquisition Activity
In 2013, we acquired several companies in cash transactions for an aggregate purchase price of $195 million, resulting in goodwill of $103 million and acquired intangible assets of $83 million. The primary reasons for these acquisitions were to expand our customer base and sales channels and to obtain certain technologies to be used in product development. We determined the estimated fair value of identifiable intangible assets acquired primarily by using the income and cost approaches. These assets are included within “Other assets” on our consolidated balance sheets and are being amortized to operating expenses on a straight-line or accelerated basis over their estimated useful lives. Acquisition-related costs were expensed as incurred and were not
Cited: James, Andrea. "Amazon Talks Strategy, International Growth." Amazon the Online Retail Blog. Seattle Pi, 10 Dec. 2008. Web. 25 July 2014. "View Filing Data." View Filing Data. SEC, n.d. Web. 25 July 2014. Nikolai, and Bazley. Accounting Undergraduate Capstone. 2nd ed. Mason: Cengage Learning, 2013. Print.