A Company Analysis of

Amazon.com, Inc.

By: Fatima Dea Marie S. Abille

BSA 22

A Study Submitted to
Mr. John Michael De Mesa

MGAC202 – Governance, Business Ethics, Risk Management and Internal

Control
 INTRODUCTION

American culture supports the idea that individuals consume goods and services in the
market beyond their means as to achieve a sense of happiness and has always been a desirable goal
for a person’s wellbeing. With copious amount of advertising, it convinces consumers to
continuously upgrade their belongings as trends and preferences are constantly changing,
impeding individuals from gaining complete satisfaction. Through partaking in purchase after
purchase, the person has fundamentally depend his/her satisfaction through materialism. Over the
years, the rise of e-commerce has significant effect in almost every retailer’s business model as
well as intensified consumerism instilled in people since buying and selling over the internet are
now more flexibly and passively. The development of e-commerce is reshaping the footprint of
retail, replacing traditional brick and mortar stores and in-store customer service. The rise of e-
commerce is arguably its most significant transformation in retail industry yet with about 22% of
the world shops online. While there is a numerous amount of e-commerce companies, the most
outstanding and notable of them all is Amazon. The company is most closely tied with the e-
commerce phenomenon.

Amazon.com is a American multinational technology company based in Seattle,

Washington and founded in 1994 by an American named Jeff Bezos, a computer science and
electrical engineering graduate from Princeton University. Without knowing much about retailing,
Bezos came across a statistic that the Internet was growing at 2300%, this convinced him to risk
this large growth opportunity. Now, the company is the largest online retailer in America dealing
with a wide range of consumer products such as books and other products thus, has been referred
to as “one of the most influential economic and cultural forces in the world”. Since the time it was
established, Amazon.com has acquired five different businesses which focuses on e-commerce,
cloud computing, digital streaming, and artificial intelligence. Jeff Bezos was picked by Time
Magazine in 1999 as person of the year at the age of 35, making him the fourth-youngest person
of the year.
 COMPANY OVERVIEW

Amazon Company is one of the most profitable businesses dealing with online products
(Longo, 2009). The company evolved over time in order to achieve its present title as the largest
retailer in the world through adapting major initiatives towards meeting the varied needs of its
consumers around the world. While the company started out as the world’s biggest bookstore, Jeff
Bezos aimed more and worked hard to become the world’s biggest store in the long run. Amazon
developed substantially along these lines through expanding into new product categories such as
cookware and tools. It provides services to four primary customer sets: consumers, sellers,
enterprises, and content creators. The company offers programs that enable sellers to sell their
products on its websites and their own branded websites, earning fixed fees, revenue share fees or
per-unit activity fees from these transactions.

A company as big as Amazon.com, Inc. wouldn’t be possible without great vision and clear
perspective. Amazon company’s perspective is to offer the Earth’s biggest selection and to be the
Earth’s most customer-centric company, where customers can find and discover anything they
may want to buy online. Surely enough, the company's foray into providing the "Earth's Biggest
Selection" had yet to prove it could provide profits on a long-term basis.

COMPANY CULTURE

With over 1.30 million employees, Amazon company asserts that their company is where
smart, passionate people obsess over customers and innovate on their behalf. Amazon employees
are not just encouraged to come up with a big idea, Founder and CEO Jeff Bezos has called
Amazon “the best place in the world to fail.” they’re empowered to own and build it. Fair enough,
Amazon ranks #2 on Forbes World’s best Employers list 2020. As stated in their company
website, Amazon company states that, “We’re a company of pioneers. It’s our job to make bold
bets, and we get our energy from inventing on behalf of customers. Success is measured against
the possible, not the probable. For today’s pioneers, that’s exactly why there’s no place on Earth
they’d rather build than Amazon.” This shows that Amazon’s organizational culture has the
following characteristics: Boldness, Customer-centric, and Peculiarity. The company motivates
their employees to think outside the box to bring the e-commerce business to its maximum
potential.
However, their company culture may be effective for the growth of the company, there are still
flaws and disadvantages that rises from their current company culture. Some employees and
previous employees of Amazon company state that the company provides unrealistic performance
standards as their work culture is based on fear and the lack of recognition of employee
contribution. Generally, an intensive corporate culture with an extension pressure to employees
are not as accepted in workplace as much as before. Today, workplaces should be nurturing and
encouraging. Nevertheless, with Amazon’s company culture, they replaced Google as the best
place to work in US, according to LinkedIn. This shows that the unique culture of the company is
only for people who can thrive under immense pressure and fast-paced environment.

COMPANY ETHICS

In the company website, Amazon states how employees should always act lawfully, ethically,
and in the best interests of Amazon.com. Employees of the company must always follow
applicable law, rules and regulations at all times. In terms of conflicts of interest, employees are
expected to use their judgement to act at all times and in all ways in the best interests of
Amazon.com. In addition, insider trading policy is strictly implemented in the company. Federal
and state laws prohibit trading in securities by persons who have material information that is not
generally known to the public. Consequently, employees of the company may not a) trade in stock
or other securities while in possession of material nonpublic information or b) pass on material
nonpublic information to others without express authorization by the company or recommend to
others that they trade in stock or other securities based on material nonpublic information. Next,
in terms of discrimination and harassment, the company provides equal opportunity in all aspects
of employment and will not tolerate any illegal discrimination or harassment of any kind.
Following this, health and safety is also a priority in the company. They provide a clean, safe, and
a healthy work environment for their employees and in return, each and every one of their
employees has the responsibility to maintain a safe and healthy workplace. Furthermore, price
fixing is also under their code of conduct as well as bribery or payments to government personnel.
Moreover, recordkeeping, reporting, and financial integrity must be maintained in appropriate
detail and must always properly reflect the company’s transactions as well as to conform both to
applicable law and to the company’s system of internal controls.

These moral principles that act as the guidelines for the way the company conducts itself and
transaction is a clear and direct communication of behavioral expectations. However, many
researches and articles highlight ethical issues that arise from the company including tax
avoidance, climate change, environmental reporting, habitats & resources, pollutions and toxics,
human and worker's rights, irresponsible marketing, animal rights, animal testing, factory
farming, use of controversial technologies, political activities, and anti-social finance. Despite all
of these, many people are still using and supporting Amazon. The problems and power of Amazon
may seem far reaching. In supporting something, people must always keep in mind the business
ethics that drives the company and if they are complying with it since it affects, not only the
company and its employees, but also the environment and the people.

EXTERNAL ENVIRONMENT OF THE COMPANY

DEMAND DETERMINANT AND PROFITABILITY DRIVERSE

E-commerce is now in demand more than ever. Online shopping has since then become an
explosive growth due to the fact that it serves economic and convenient approach in purchasing.
Amazon company has three pillars of their business wherein they receive the most profits and thus,
their profitability drivers. First we have Amazon Web Services, Amazon’s cloud computing
service and was created as a simple storage service to support Amazon’s e-commerce website. It
generated a revenue run rate of 10 billion US Dollars in 2015 and contributed more than 50% to
the company’s operating margin in first quarter of 2016. Secondly, Amazon Prime. It is a paid
membership of video streaming services, music and the ability to borrow books from the Kindle
owners’ lending library. Next is the Amazon Marketplace which was launched 15 years ago. It
provides third-party sellers with access to millions of shoppers in order to sell their products.
According to marketrealist.com, “Third-party sellers benefit Amazon’s gross margin, as the
company doesn’t have to invest in any product costs, yet it gets a commission from sales. This
remains a great source of profit for Amazon, as the gross margins associated with these transactions
are very high. The company stated that in 2015, about 50% of units sold on Amazon.com were
sold by third-party sellers”. This shows how automation of marketing enables conveniency to
people as well as exhibits fulfillment of customer’s demand in their needs and wants which in
return reflects the growth and success of e-commerce business such as Amazon.com, Inc.

PORTERS FIVE FORCES ANALYSIS

Since e-commerce is thriving, Amazon.com, Inc. competes against many e-commerce
businesses from small online retails stores to large physical firms such as Walmart. The retail
industry is not constant thus, Amazon company should be flexible and resilient in changes
internally and externally. Based on Porter’s Five Forces Analysis model, Amazon company has a
strong force in competitive rivalry or competition, bargaining power of buyers or customers, and
threat of substitutes or substitution while having a moderate force in bargaining power of supplies
and a weak forces in the threats of new entrants or new entry.

INTERNAL ANALYSIS

CORE COMPETENCE
Amazon’s core competencies are centered on providing customer satisfaction via fast
delivery, great customer service, and an access to wide range of products at a lower cost. This
focuses on innovative infrastructure and logistics, effective customer relationship management as
well as effective supplier relationship management. Since Amazon is a large firm that deals with
a variety of products and services, their core competencies would determine how they serve their
customer’s satisfaction while still generating income. It delivers on this mission with an
unparalleled ability to streamline the buying process, deliver products quickly and efficiently, and
to create tools and an ecosystem where vendors and customers can connect with each other.

The company developed their e-commerce landscape with the introduction of Amazon
Prime which guarantees two-day shipping back in 2015. To further attract more customers, they
introduce Prime Now in 2015, guaranteeing delivery within two hours for select products and in
select cities. Amazon company does not stop there. They continue to innovate with this way of
thinking by providing multitudes of platforms that allow sellers, content creators, and more to
distribute products and services under the Amazon ecosystems such as Twitch (video game
streaming), Audible (audiobooks), Amazon Web Services (cloud hosting)), and Whole Foods
(supermarket chain). Of course, none of this is possible without a reliance on new and improved
technology. One example of Amazon leveraging technology is its own version of convenience
store called Amazon Go. Standing by its purpose of convenience, this cashier-less stores have high
tech cameras that record what customers choose, and then charge digital carts as people walk out
of the store. Another example can also be seen in its use of drones and robot workers. The company
currently uses robots in its warehouses to help with moving inventory, and has plans to deliver to
customers’ doorsteps using drone technology.

Amazon’s aim to be “Earth’s most customer-friendly company” is getting clear and

possible due to a consistent reliance on core competencies such as distribution, logistics, creating
platforms and tools for people, and leveraging technology.

SWOT ANALYSIS
SWOT analysis is the internal review of an organization’s strengths, weaknesses,
opportunities, and external environment threats, which influence its strategic decisions. A SWOT
analysis of Amazon is included to further the identification of the company’s areas of improvement
and concern while highlighting the aspects of the company that Amazon should continue to
maintain.

STRENGTHS WEAKNESSES
1. Brand Valuation and strong brand 1. Easily imitable business model
name 2. Tax avoidance issue
2. Customer centric 3. Limited brick-and-mortar presence
3. Innovation 4. Workplace conditions and company
4. Large merchandise selection culture controversy
5. High number of third-party sellers 5. Unfair use of third party data
6. Involved into 3 key business 6. Employee strike
7. Market leader 7. Consumerism
8. Superior Logistics and distribution
system
 OPPORTUNITIES THREATS
1. Expanding physical store 1. Company controversies
2. Improve technologies 2. Government regulations
3. Improve organizational policies and 3. Aggressive competition
strategy 4. Imitations and fake products
4. Launch of electric rickshaws in India 5. Devaluing brands
5. International expansion
Figure 1. SWOT analysis of Amazon.com,Inc.

The SWOT analysis shows the current standing of the company. It clearly shows how the
company with a lot of strengths that drives them up and forward in the online retail industry, there
are still weaknesses present and thus must be improved and focused on through the opportunities
while taking the threats into account. Generally, Amazon needs to strengthen and maintain its key
areas, reduce its weaknesses, grab its opportunities, and counteract threats in order to progress long
term.

CONCLUSION

In conclusion, Amazon.com plan of maintaining the competitive edge in the market is to

employ every resource it has to make profits. It is clear that their company culture is effective thus,
must be improved while still standing by its business ethics in order for them to prosper more and
produce quality services from quality employees. In the era of technology advancement, Amazon
should boost its marketing efforts, promotional activities, and strategically deal with global
controversies to consolidate their market dominance. Amazon’s business model capitalized off of
brand recognition, making them the prominent leader in e-commerce thus, a great public image
with great service would result to the company’s success. The company needs to focus on brand
retention and preservation in order for them to maintain or even so, improve the future of Amazon.
Amazon is a large company dominating the e-commerce industry but it should not stop there; with
a great amount of competitors and threats in the industry, constant development of the company’s
structure and marketing strategy should always be a priority. As the evolution of retail
demonstrates, it is a flexible and ever-changing industry thus, it is imperative for Amazon to focus
and support its brand, consumers, and the company’s future.

REFERENCES

Alvesson, M. (2016). Organizational Culture. Sage Publications Incorporated.

Byers, A. (2007). Jeff Bezos: the founder of Amazon.com. New York: Rosen Publishing Group.

Ehrlich, C. (1999). Retail Success Factors. Web.

D’Agostino, J. (2018). Amazon, E-commerce, and The New Brand World. Thesis.

Gupta, S. K. (2021, April 27). Amazon SWOT 2021 | SWOT analysis of Amazon. Business Strategy
Hub. https://bstrategyhub.com/swot-analysis-of-amazon-amazon-swot/

Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling Big Ideas in a Bruising
Workplace. The New York Times.

Krishnamurthy, S. (2005). Amazon.com – A Comprehensive Case History. Thesis.

Roth, D. (2018). “LinkedIn Top Companies 2018: Where the U.S. wants to work now”. LinkedIn.