Business Combinations and Financial Analysis of Amazon.com

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This report provides a detailed analysis of Amazon's business strategies and their impact on financial performance. It examines key strategies such as Amazon Go, innovative grocery store concepts, and the use of retail analytics. The report assesses the value of acquisitions and investments on firm profitability, analyzing the effects of equity investments and impairment. It also explores the growth of the EU market on Amazon's sales revenue. The analysis includes an overview of Amazon's market position, its merger and acquisition activities over several years, and the financial implications of these actions, including revenue growth and changes in net profit. The report references several sources to support its claims, offering a comprehensive view of Amazon's business operations and financial health.
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AMAZON.COM BUSINESS COMBINATIONS
AND FINANCIAL RESULTS ANALYSIS
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TABLE OF CONTENTS
3 strategies of Amazon and impact on profitability.........................................................................1
Accessment of final value of acquisition and investment on firm profitability..............................1
Analysis of effect of equity investment and impairment on profitability of Amazon.....................3
Growth of EU market on Amazon...................................................................................................3
REFERENCES................................................................................................................................4
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3 strategies of Amazon and impact on profitability Amazon go: It is one of the main strategy under which Amazon customers have to use
mobile application when they enter in to store. Whatever, customer pick and drop from
shelf is detected using machine learning algorithms and deep learning etc. When
customer leave premises or check out receipt is generated for customer amazon account
and deducted from bank account. There are advanced sensors in the retail premises
through which in easy way all these things are detected (Laudon and Traver, 2013).
Customers observe advance shopping experience on the Amazon retail store. It can be
said that due to all these things customers are increasing in the firm business. It can be
observed that sales revenue is increasing consistently in the business and it is the use of
advanced technology that is helping firm in creating new customers in its business. Innovative grocery store concept: Amazon recently launch innovative grocery store
concept and under this one can place order online. Customers can load their digital carts
remotely and can make payment online and then can schedule physical pick up in two
hour window. Thereafter from specific place which is nearby to customer in its daily
routine delievery of product can be taken. All these things lead to saving of time of
customers and it can be said that all these things add number of customers in firm
business at fast rate. It can be said that strategy use lead to increase in sales revenue. Use of retail analytics: Firm is using retail analytics at its workplace and under this data
that is gathered in the business is analyzed by using analytical tools. Through sensors and
IOT data is gathered and stored in data warehouse (Kantor & Streitfeld, 2015). Same data
is analyzed and on that basis it is identified that which sort of products must be offered to
the customers. It can be said that retail analytics help firm in allocating its resources in
better way which ultimately lead to increase in profit in the business.
Accessment of final value of acquisition and investment on firm profitability
Amazon is an electronic commerce company and a cloud computing organization that is
headquartered in Seattle, Washington. It is a public limited company with primary listing on
Nasdaq stock exchange and one of the leading internet retailer in the world. In the Global
Fortune 500 Ranking, company is ranked at 12th position with the market value of $423,031
million and total revenue of $135,987 million (Global Fortune Ranking, 2017). In order to stay
competitively strong in the market, company follow merger and acquisition (M&A) strategy.
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(Source: Global Fortune Ranking, 2017)
In the last 5 years, company had made many mergers and acquisition like in 2013, Ivona
Software, Goodreads, Liquavista and TenMarks Education Inc had been acquired. In 2014, it
acquired Double Helix Games, Comixology, Twitch and Annapurna labs, ClusterK, Safaba
Translation System & Elemental Technologies in 2015. Again, in 2016, it had acquired NICE<
Curse Inc, Cloud9 IDE and Biba Systems and recently, Harvest.ai, Thinkbox Software,
Souq.com, GameSparks, Body Labs, Goo Technologies had been acquired by Amazon.com.
In 2016, it acquired companies with a total aggregate price of $103 million which mainly
aims at obtaining technical know-how so as to serve consumer effectively. In FY 2015, it had
acquired companies with an aggregate price of $690 million which did not have a materialistic
impact on the consolidated financial statements which raised revenue from $89,039m to
$107,054m whilst net loss of $311m changed into profit of $576 million. Acquisition of Twitch
Interactive Inc in 2014 worth $842m in cash and other companies with an aggregate cost of $20
million to acquire latest technologies and technical know-how had a minuscule impact on its
revenue growth at 22% and plummet loss by 74 cents each share. Its phenomenal growth
benefited Amazon with more audience reach and benefited Amazon. It raised its goodwill by
$707 million. In FY 2013, Amazon had paid $195 million for the acquisition, resulting goodwill
and intangible assets by $103 million and $83 million. With such acquisition, it had experienced
significant growth in its consumer base, sales channel and product development.
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Analysis of effect of equity investment and impairment on profitability of
Amazon
Equity investment have heavy impact on the profitability of the mentioned company. It
can be observed that while aquiring any company Amazon need to make investment in that
company equity because it is necessary to buy stack in that firm. It can be observed that in year
2013 there were four companies that were aquired by Amazon. In 2014 three firms acquisition
were done and in 2015 6 companies were aquired (BergvallKåreborn & Howcroft, 2014).
Thereafter, in year 2016 four companies were aquired followed by equity investment in 10
business firms. It can be observed that from year 2013 to 2017 sales revenue increased from
61093 to 135987. This reflect that equity investment and impairment lead to fast growth in sales
revenue amount. It is true that while aquiring any firm revaluation of asset is done and if it is
recorded at higher value then same is impaired. By doing so at accurate value an asset is priced.
All these things lead to decline in asset price but technology innovation create different image of
company among customers. Due to this reason revenue increased at fast rate in the firm business.
It can be said that equity investment and impairment does not lead to earning of low profit in
business and opposite to this profit increased at rapid rate due to addition of new customers in
the business.
Growth of EU market on Amazon
European market growth have positive impact on Amazon because gradually relevant
nations economic condition get improved and due to this reason income level of people get
increased (da Silva Delabona and et.al., 2012). Due to all these things sales revenue of firm
increased and it can be said that growth in EU market have positive impact on the firm.
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REFERENCES
Books and journals
BergvallKåreborn, B., & Howcroft, D. (2014). Amazon Mechanical Turk and the
commodification of labour. New Technology, Work and Employment. 29(3). 213-223.
da Silva Delabona, P. and et.al., (2012). Use of a new Trichoderma harzianum strain isolated
from the Amazon rainforest with pretreated sugar cane bagasse for on-site cellulase
production. Bioresource technology. 107. 517-521.
Kantor, J., & Streitfeld, D. (2015). Inside Amazon: Wrestling big ideas in a bruising
workplace. New York Times. 15. 74-80.
Laudon, K. C., & Traver, C. G. (2013). E-commerce. Pearson.
Online
Global Fortune Ranking. (2017). [Online]. Available through:<
http://fortune.com/fortune500/amazon-com/>.
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