September 5, 2011
Financial Research Report: Amazon.com Inc.
Amazon.com is an electronic commerce business which provides an online marketplace for individuals to shop from the comfort of their own home computer, laptop, tablet, phone, etc. The organization proudly boasts its highly diversified product line-up, offering goods in virtually every category that one might imagine, including books, household goods, electronics, media, grocery and industrial. Their ultimate goal as an organization is to offer Earth’s biggest selection of products while being the most customer-centric company for consumers, sellers and enterprises (“Annual report,” 2008). The company has continued to grow increasing their product offerings and services for consumers.
Given the online nature of their business and the significant growth they have experienced within the United States they have expanded into other countries as well including Canada, China, France, Germany, Italy, Japan and the United Kingdom. While expanding into international markets is challenging, the challenge is somewhat lessened by the fact that Amazon.com operates on an online platform. The organization has had success in moving into international markets as evidenced by the multiple countries in which they operate. Amazon.com is looking to continue expanding into international markets; however, they are cautious about moving into markets which they are not familiar. By moving into markets with which they are unfamiliar the organization runs the risk of taking a significant loss by not understanding how business operates in the foreign country. Therefore, the organization continues to move cautiously into foreign markets to protect the work that they have done so far.
In addition to the benefits of the online market place and their expansion into foreign markets, the philosophy of Amazon.com has also contributed to its success. Their focus is heavily upon their customers, sellers and enterprises—ensuring that they have the best experience working with the organization as possible so that they will continue to work with the organization in the future. This not only helps build and retain their brand image, but also helps set them apart from their competitors. Given the fact that the organization is built upon the structure of the online marketplace, it is virtually in competition with every other website that sells merchandise or goods on the web. Not only does the organization face competition from other online retailers, but they also face competition from brick-and-mortar stores as well. This is due to the fact that these stores have a competitive advantage of the consumer being able to actually see and interact with the product before purchasing, which unfortunately is not something that is possible when selling merchandise online. Ratio Analysis
While Amazon.com continues to look towards the future by developing new technologies to improve user experience, the current state of the organization is also important to examine. The primary means of determining whether an organization is healthy and doing well is by looking at the financial documents that must be publicly disclosed every year. Looking at the numbers on these documents tells investors the financial health of the organization—if it’s making money, what kind of debt it maintains and the growth or decline of the organization. Once the financial health of the organization is determined investors can make an informed decision about whether or not they wish to invest in Amazon.com. All of the financial documents that are needed to determine the financial health of an organization can be found on the annual report that is disclosed by any incorporation every year. It is federally mandated that corporations disclose this information for investors. These documents show investors the assets and liabilities of the organization, their sales,...