Corporate Finance Assignment on Amazon

Corporate Finance Assignment
2019

Amazon
Executive Summary
Amazon.com Inc is a powerful player in the online retail and is popular for the continuous
sales and market share and that too at the expense of the profit. The current report revolves
around the company Amazon where the cost of capital is vividly described. The business uses
debt to a major extent and hence the cost of debt part is kept at the priority in the report. The
calculation has been provided where it is noted that the reliance on debt is high and hence
Amazon might face a challenging position in the upcoming future. Therefore, to combat such
a scenario, it is recommended to the company to have lesser reliance on debt.
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Amazon
Contents
Introduction...........................................................................................................................................4
Key Financing Issue................................................................................................................................5
Conclusion:..........................................................................................................................................10
References...........................................................................................................................................11
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Amazon
Introduction
Amazon was launched in the year 1995 and was founded by Jeff Bezos in the year 1994.
Amazon is the first company in the large group that started selling goods online. The
company is based in Seattle, Washington. The company initially sold books over the internet
and later it engaged in selling other items online such as electronics, gadgets, video games,
garments, DVDs, music and what not. Jeff Bezos was honored as Person of the Year by the
Times magazine in the year 1999 due to his immense contribution towards the
encouragement of digital shopping all over the world. Amazon.com labels itself as a
customer-centric organization. The company believes itself to be customer obsessed. The
entity highly believes that if the feedbacks and queries of its customers are ignored and left
unanswered then nothing can save the company from failing. The company also takes up new
challenges considering the same as opportunities.
The company highly values its customers and places them above all. Amazon expects
ownership from its personnel because it is of the opinion that in order to create and sustain
the brand value for an organization, there must be a prevalence of ownership and
responsibility in its employees. When the employees will develop a sense of ownership
towards the brand then they might passionately work for the company and think of the future
in a way that enhances the brand value of the same (Donius, 2010). The HR of the company
makes sure that the candidates hired by the same are admirable and knowledgeable. It is why
the recruitment process in the company is tough and getting a job in the same is a task in
itself.
The e-Commerce spending is expected to rise up to $5 trillion by the year 2020 which at
present is at $2.1 trillion. This means that there are strong probabilities for the Indian E-
commerce industry to have a promising future ahead of it owing to enhanced consumer
demand and a strong economy. However, there are several e-commerce industries that have
failed in their very first year despite such growth trends. Therefore, this calls for the need to
identify possible challenges associated with the e-commerce industry. The government laws
and regulations change from time to time and therefore, the same exposure a great risk on the
operations of an entity (Melville, 2013). Political unrest, economic recessions, taxations,
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