Audio Transcript Auto-generated
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I'm Jonah's Cotino and I'm going to be discussing the amazon case report Today,
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Amazon was started in 1994 when it was created
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by Jeff Bezos as an online book retailer.
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This book Retailer was where people can go to
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get their favorite books online rather than having to go
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to the library or going to the store to buy
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their other other books that they wanted to get,
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they had the easy convenience to get them online.
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Over time, amazon has developed into a large e commerce company selling books,
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electronics, clothing, and tons of other items that you can think of
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being such a large company. Amazon is bound to have competitors.
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Its competitors include walmart, Ebay and Alibaba that are all popular.
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Large e commerce companies.
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However,
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walmart is also an in person company and Amazon is starting to grow and
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develop and have storefronts where people can go physically and shop amazon items.
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Jeff Bezos,
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the creator was ceo of the company up until 2021 where
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he had stepped down and was replaced by Andy Jassy.
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Amazon being such a large company is bound to have issues just
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as any other company does because it is such a big company,
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it needs tons and tons of employees to help
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the company run smoothly and get things done efficiently.
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Having so many employees though however,
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has shown to be a problem for amazon because they're not keeping
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up with their workplace and maintaining
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proper workplace conditions for their employees.
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This is being brought to the attention of investors through bad press companies
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are going to lose the company is going to lose revenue if the bad
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press continues and investors continue to raise an issue about it because they are
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proposing audits of workplace conditions and threatening
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to pull out investments in amazon.
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If the workplace conditions are not up to par,
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these investors will pull out their investments in amazon,
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which is not going to be a good thing because Amazon in the past has not been
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a company with a lot of profit.
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So investors are really what keeps the company
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running and keep things successful within the company.
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Amazon has always had a long-term approach.
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Their vision has always been to go long term.
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The company went public in 1997,
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which was a great turning point for Amazon
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because it allowed more people to invest and
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raised interest in the company that had not been present if it would be public.
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And the company having that long term approach has been
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under the vision of Jeff Bezos that it's all about.
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The long term, short term is important,
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but long term growth is what really will keep the company successful.
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The vision focused on sustainable growth and free cash flow.
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This would be accomplished by increasing operating
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income and managing workplace working capital expenditures,
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amazon maximized expansion through acquisitions by getting items of all
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different styles and from all different types of categories,
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amazon has been able to grow through that certain items
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people look for at the grocery store and whatnot.
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They can't find their,
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but they can go onto amazon and those products will be available for them.
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Two major benefits of their long term performance have
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been that they have achieved economies of scale,
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achieving economies of scale have mean they have grown to be
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such a huge company from the small little online book retailer.
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The company is now globally world renowned
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giant company that everybody knows internationally.
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People are ordering things from amazon and
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getting them delivered to their countries.
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City states that they couldn't once get before.
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They have also been able to eliminate or weaken competition.
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Being such a big company having competitors again like walmart, alibaba, Ebay,
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they are now eliminating,
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not eliminating but weakening those companies they have,
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they were once top dog and now amazon is building their way
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up to top those companies and continue to grow ahead of them.
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Long term
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amazon also has had short term performance that has shown to be very beneficial.
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Amazon's short term goal began with investing in research and development,
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by investing in research and development.
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Amazon had been able to gather marketing strategies and see what
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the customers want and be able to provide for them.
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They have also been able to grow the company,
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developing the company globally and expanding,
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has allowed them to gain that success.
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Another another short term goal,
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Amazon has is sacrificing profit short term to
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allow the company to maximize profit long term
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and this has actually worked very well for Amazon in 19 between 1997 and 2016.
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Amazon has had 4.9 billion in net income realize and
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60% of that 4.9 billion came from 2015 to 2016.
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So their short term performance is slowly starting to show the success long term.
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Between 2014 to 2015, the net sales rose 20% and between 2015 to 2016, they rose 27%.
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The total net sales increased over the three years,
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which is showing that more people are buying into amazon and using the
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website to find products and services rather than going to the store,
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amazon's innovations.
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Amazon does not just have the one website,
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they have taken their success from the one website and developed their own products
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specific and unique to them.
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For example, Alexa amazon Alexa you can now find in almost every household.
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This is a virtual assistant technology.
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It's a small piece of technology that people can plug
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into their home and use as their little virtual assistant.
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It can make appointments, it can play music,
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it can call or text or you can ask it a question and it
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can search the web for you and find the answers to your questions.
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Another innovation amazon has is their prime membership program.
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Amazon has taken their amazon website and developed a membership program out of it.
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This membership program gives access to special prices,
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free shipping and many more perks such as Prime Day,
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which you can compare to black friday or cyber monday,
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where amazon just has really great deals and people
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can buy and get free delivery if they have amazon
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amazon prime
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and just have access to those great deals.
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It is a monthly or annual membership, so it does add profit to the company as well.
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Amazon also has Prime Video which you can
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compare to other streaming services such as netflix,
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Hulu or Disney plus this has access to movies, tv shows,
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live streaming in sports through this.
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Amazon has also developed their own original movies and tv shows
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that you can only access through that Prime video membership.
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Again, it is a monthly or annual membership that contributes to amazon's profit,
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Amazon's profitability ratio,
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Amazon's profitability ratio has increased 3% in return on
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assets and return on equity from 2015 to 2016.
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Amazon ones being a company that relied a lot on money from investors is now
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starting to gain in profitability and equity and
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it is showing on their profitability ratio.
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It is
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And sales and gross profit margin have increased from
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2014 to 2016 more people are using Amazon.
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This also is showing that more people are choosing Amazon rather than going
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to the store and having to buy their items in the store,
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amazon's liquidity ratio liquidity is very important in any company
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to measure when it comes to the event of bankruptcy.
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In the case of bankruptcy,
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a company will have to liquidate all of their assets and use
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it to pay off investors and any other debts that they have.
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If a company does not have a high enough liquidity ratio,
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they will not have enough money to pay their liabilities.
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Looking at the chart,
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you can see Amazon's liquidity has decreased from 2014 to 2016.
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This is not good from the company,
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but it is expected due to delaying customer receiving items.
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They do not have a lot more current assets than liabilities to cover their debts.
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So their assets are not much greater. And if they continue to follow this path or
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liability liquid liquidity ratio will continue to decrease and
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risk of not having enough assets will continue.
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They have a low quick ratio, which is less than one,
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which also makes it uneasy for amazon to pay its liabilities,
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amazon's debt to equity ratio.
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This is a big measurement of a company's health and
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how much leverage they're using to be in business.
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This figure shows that a decrease in amazon's debt to
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equity debt to equity ratio from 2014 to 2016.
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This is a favorable favorable statistic for amazon as it means
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that debt is decreasing relative to the amount of equity they have
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In order for this company.
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In order for Amazon to be in a statistically good standing,
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they have to lower their ratio to around 2.5,
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any debt to equity ratio around two or 2.5 is considered good for this industry
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And you can see they are following suit decreasing from 2014 to 2016 and
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their debt is being lowered while their profit and sales are continuing to increase
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overall, amazon is a very successful company.
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They're completely doing the right thing with their long term progress.
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But there's always ways they can prove if they invest
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more companies that can replicate the system in place,
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it will allow growth.
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For example,
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whole foods is a company that amazon is
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investing in and completing the similar a similar system
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and if they continue to find other companies,
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amazon will be more well known and will continue
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to provide visibility and global presence for the company.
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If amazon continues to invest in amazon
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web services and provide cybersecurity surfaces,
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it will benefit and protect both amazon and the customer.
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A lot of online hackers or competitors are hacking in two systems such
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as Amma on stealing information for marketing resources or for credit resources,
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they're stealing people's identities and things like that so it always is
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safe and will make a customer much more comfortable using this website.
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If they have the proper cybersecurity,
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amazon has remained successful through their trial and error approach. They have,
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they
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that made them the fourth largest U. S. Public company,
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they have to have failure in order to gain success if they
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can learn from their mistakes and continue to improve on them,
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it will help the company grow tremendously.
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The company already being so big, has gone through tons of failures.
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But it is also continue to grow on an uphill
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uphill curve and it will do so if the company will follow the trial and error and not
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go so down with errors, the company remains in good standing,
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it will just continue to grow and overall amazon is a great company to invest in.
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That's why so many people are still investing
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in it and is continuing long term growth.
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Their short term growth is amazing but their long term growth
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is what will really show the success of the company.
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And so far it is proven to be very successful.
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And amazon has grown to be the fourth largest online company,
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fourth largest U. S.
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Public company and could even grow even higher and be
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the first one day if it continues on this path.