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Amazon

Strategic Management Presentation
by

Hannah Lowery

on 1 October 2014

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Transcript of Amazon

Scott Vest
Joshua McCutcheon
Justin Kleinfeld
Hannah Lowery

Questions?
E-commerce company
Founded in 1994 by Jeff Bezos
Headquartered in Seattle, Washington
Began selling on the World Wide Web in 1995
Mission: to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, while offering the lowest possible prices
Consumers
Serve customers through retail websites
Focus on selection, price, and convenience
Strive to offer customers the lowest prices possible
Over 250 million active customer accounts
Sellers
Sellers can sell their products on Amazon.com or on their own branded website and fulfill orders through Amazon
Amazon is not the seller, but instead earns fixed fees, revenue share fees, per-unit activity fees, or some combination
Over 2 million active seller accounts
Enterprises
Content Creators
Serve developers and enterprises of all sizes through Amazon Web Services (AWS)
Provide access to technology infrastructure that enables virtually any type of business
Serve authors and independent publishers with Kindle Direct Publishing and Amazon Publishing
Offer programs that allow authors, musicians, filmmakers, app developers, and others to publish and sell content
5 Forces
Core Competencies
S
W
O
T
Strengths
Minimized overheads in core business (online retail)
Revenue growth
Willingness to enter new markets
Wide range of products
Strong brand reputation and recognition
Weaknesses
Diversification
Profits
Shareholders’ patience
Opportunities
Streaming services
Movies, TV, Music
Drone technology
Credit services
International Sales
Threats
Licensing costs (books & movies)
Other legal proceedings
Tax laws effect on customer behavior
Shipping costs
FAA regulations
International competitors
Recommendations
Rated in the top 50 CEOs in 2014 by Glassdoor
From one department in 1995
to 36 in 2014
Amazon Instant Video
Appliances
Apps & Games
Arts, Crafts, and Sewing
Automotive
Baby
Beauty
Books
CDs
Cell Phones
Clothing, Shoes & Jewelry
Collectibles & Fine Art
Computers
Credit & Payment Cards
Digital Music
Electronics
Gift Cards Store
Grocery & Gourmet Food
Health & Personal Care
Home & Kitchen
Industrial & Scientific
Kindle Store
Luggage & Travel Gear
Magazine Subscriptions
Movies & TV
Musical Instruments
Office Products
Patio, Lawn, & Garden
Pet Supplies
Prime Pantry
Software
Sports & Outdoors
Tools & Home Improvement
Toys & Games
Video Games
Wine
Executive Compensation
Owns 18% of Amazon
Approximately world's 20th richest person
Highest paid executive salary at Amazon is $175,000 yearly - Diego Piacentini
Second highest executive salary is $165,000 - Jeffrey A. Wilke
CEO Jeffrey Bezos only paid $81,840 salary
paid additional $1,600,000 for security arrangements
One of lowest paid CEOs of a technology company
Restricted stock awards given every two years to execs (not to CEO)
reduces cash compensation
serves as incentive for employee productivity
Amazon aims to give its top executives “a minimum level of cash compensation” because it wants their pay to be tied to building shareholder value
Total Amazon Executive Compensation
Seek to be the Earth's most customer-centric company for:
Competition
Risks
Intense Competition
Greater resources
Longer histories
More customers
Greater brand recognition

Expansion
Strain on management, operational, and financial resources
Additional business, legal, financial, and competitive risks
International market segments

Seasonality
Restocking
Overstocking
Website activity

Data Loss
Web-based
Third party technology and systems
Security breach

Inventory Risk
Government Regulations
Payment Related Risks

Rivalry
Substitutes
Suppliers
Entrants
Buyers
Medium
Low
High
High
High
Amazon's Global Locations
53 Fulfillment Centers
14 Customer Service Centers
Other Amazon Companies
Future Plans
Technology Development and Innovation
Efficient Operations and Supply Chain
Data Collection and Analytics
Customized Individual Marketing
Ease of buying process for customers
Flexibility
Leadership
Customer Service
Move out of the smartphone industry

Increase marketing

Continue push on original content to compete with companies such as Netflix
Key Strategies
Provide premium products at non-premium prices

Make money when people use Amazon's devices, not necessarily when they buy them
Full transcript