Discuss the issues that amazon.com had as the company grew and changed. From 1994 to 1997, amazon.com experienced tremendous growth. This led to its IPO on May 15, 1997, which was a success, netting 50 million and stock continued to trend upward. Driven by this, Amazon took a move to become an online superstore from the “Earth’s biggest bookstore.” Expenses continued to accumulate as they acquired more inventory, which created a need for more warehousing, inventory management, and support accordingly. The company continued to invest in their growth and expanded its marketplace business model through a series of equity partnerships with online retailers. Amazon showed that it was a company committed to developing best in class business practices by the amount they invested in their growth and acquiring key business figures from leading retailers. As with most dot com companies, their spending caught up to them and they were struggling in the red. The stock price fell from $113 in Dec 2009 to around $15 at 2000’s year-end. Bezos had an uphill battle but was determined to posting a positive cash flow by 2001 year-end. He realized they needed to do more than increase revenues and retain customers to sustain value. Amazon’s biggest hope to achieving their aggressive goal was their digital business infrastructure. In efforts to deal with competitive threats Amazon made a decision to shut down its online toy store and partner with Toys “R” Us. Adding infrastructure services to its business model will hopefully be another key component to push Amazon to the black and continued growth. What were the forces at work on the company?
With their position in the industry after the IPO in 1997 came a significant increase in expenses. Dealing with the compounding of rising expenses proved to be a learning experience for the company and they eventually found that perhaps they initially bit off more than they could chew in 2001. In order to maintain a...
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