Economics for Global Decision Makers: Amazon's Global Market Analysis

This report provides an in-depth analysis of Amazon's global market contribution, examining its performance within the context of various macroeconomic indicators. It begins with an executive summary and table of contents, followed by an introduction to Amazon and its position in the Fortune Global 500. The report then explores the interlinkage between key macroeconomic indicators such as GDP growth, unemployment rates, consumer price index, money supply, interest rates, and poverty rates, and their impact on Amazon's performance in the US market. It presents data from 2019 and discusses how Amazon responds to fluctuations in these factors, including strategies for periods of economic boom and recession. The report further provides a synopsis of Amazon's past and current performance, using data from its annual reports to illustrate its financial growth and market capitalization. It also identifies opportunities for improvement, such as expanding physical stores and enhancing its online security. Finally, the report assesses Amazon's influence at global and regional levels, highlighting its contributions to employment, revenue generation, and its role in promoting new brands and products worldwide, concluding with a summary of its diversified products and services and its impact on the global market.

Running head: GLOBAL MARKET CONTRIBUTION OF AMAZON
GLOBAL MARKET CONTRIBUTION OF AMAZON
Name of the Student
Name of the University
Author Note

1GLOBAL MARKET CONTRIBUTION OF AMAZON
Executive Summary
This paper is prepared to analyze the global performance of the fortune global ranking
company Amazon. This paper identifies the various economic indicators of the US that affect
the performance of the economy. It further lists the various strategies that can be adopted to
combat fluctuations in the indicators. Moreover, it evaluates the current and past working
condition of the corporation and asses its contribution to the overall development.

2GLOBAL MARKET CONTRIBUTION OF AMAZON
Table of Contents
Introduction................................................................................................................................3
Inter-linkage amid macroeconomic indicators and Amazon performance in the US................3
The response of Amazon to fluctuations in the macroeconomic factors...............................4
Synopsis of past and current performance of Amazon..............................................................5
Opportunities and scope of improvement in Amazon................................................................7
Influence of Amazon in the Global and Regional levels...........................................................8
Conclusion..................................................................................................................................8
References..................................................................................................................................9

3GLOBAL MARKET CONTRIBUTION OF AMAZON
Introduction
Amazon is an American based multinational corporation that belongs to the genre of
e-commerce and internet service-providing sector. It was founded on July 5 in 1994 with its
main headquarter in Seattle, Washington, United States. Amazon has expertise over internet
customer handling, digital media streaming and is considered one of the big four technology
firms. The Fortune Global 500 is a yearly ranking of the world’s top 500 corporations. This
ranking evaluates a firm’s position by calculating the total revenue of the corporations. In the
2019s Global Fortune 500 ranking, Amazon stands in the 13th position among the other
companies (fortune.com.global500, 2019). It has a major contribution to the macroeconomic
well-being and the wealth account of the United States of America.
Inter-linkage amid macroeconomic indicators and Amazon performance in the US
The key macroeconomic indicator that can affect the performance of Amazon is the
GDP growth rate, consumer price index (CPI), unemployment rate, Money Supply (M3),
poverty rate and interest rate. This can effectively affect the growth and performance of
Amazon.
Table 1: Macroeconomic variable of the United States in 2019
Macroeconomic Indicator Data
GDP Growth Rate 2%
Unemployment Rate 3.70%
Consumer Price Index (CPI) 1.70%
Money Supply (M3) 123.57
Interest Rate 2%
Poverty Rate 0.18%
Source: oecd.org, 2019

4GLOBAL MARKET CONTRIBUTION OF AMAZON
When the GDP is high, this indicates the economy is flourishing. However, the GDP
rate of the US economy is 2 percent (bls.gov, 2019). Despite its bad domestic growth levels,
this country has a high nominal GDP of USD 21.506 trillion (data.oecd.org.US, 2019). This
indicates the economy is in good shape and the productivity levels are strong. This strength is
transferred to the business confidence of firms like Amazon. Over the years, Amazon has
portrayed great performance in the US economy. This confidence comes from the low-
interest rates that make the cost of borrowings for the investors low. Thus, generating high
rates of investments for supporting the business of Amazon. Unemployment rates in the US
economy are 3.7 percent that indicates the higher purchasing power of consumers
(oecd.org.employment, 2019). The poverty levels, as mentioned in the above table, clearly
indicates the strong spending power of the American buyers. As a result, this boost sale and is
transmitted as higher revenue to Amazon. The money supply (M3) in the economy is 123.57,
which indicates higher consumer spending and higher demand (tradingeconomics.com,
2019). This again helps in creating profit for the Amazon firm in the US. Moreover, lower
rates of inflation reflect higher demand for retail goods and food. When the price level is a
low consumer is attracted to purchasing more goods. Once again, this helps in creating
demand for retail corporations like Amazon. Overall, this can be viewed that the US economy
is strong enough to support the growing prosperity of an expanding firm like Amazon.
The response of Amazon to fluctuations in the macroeconomic factors
When the economy is facing a period of a boom with supportive macroeconomic
factors, there is high business confidence among the firms with increasing investment. This
generates higher productivity levels and creates employment opportunities in the economy.
Thus, this economic strength induces firms to make higher profits by newer strategically
organized plans to maximize revenue. Amazon with a similar motive is reluctant to charge

5GLOBAL MARKET CONTRIBUTION OF AMAZON
higher prices for products and services. Even innovations in the field of media and
entertainment like Amazon prime has created a positive impact on the revenue sheets of the
corporation. Moreover, increased innovation in the production and distributing channel can
reduce the cost structure of the firms leading higher levels of profitability.
During the period of recession or downward trends in the rate of growth, the optimal
revenue-maximizing strategy for Amazon is to offer discounts and various sales promotion
measure. This is because, during the period of bad growth, there is huge unemployment due
to weak production level. This reduces the purchasing power of buyers and their expenditure
levels drop. Moreover, when there is tightness in the money supply, there is a high chance of
fall in the demand of consumer durable products. Thus, in this situation, Amazon should offer
discounts, various sales promotion coupons, cashback offers, and gifts to gain customer
attention. When the interest rates are high, the investors invest less due to high borrowing
cost. Thus, there is a chance of fall in the business confidence of Amazon. Under these
circumstances, Amazon should diversify its customer base and innovate technologies to
improve the efficiency of the existing employees to reduce operating cost.
Synopsis of past and current performance of Amazon
The yearly report of Amazon in the year 2018 portrays the continuous profit earnings
and good growth of the corporation. From the year 2014, the net sales of the company
recorded increasing growth. From the year 2014-2018, there is about $143899 million
increase in the net sales of the company (sec.gov, 2019). The operating income has also
increased from 2014 onwards and until 2018; it has raised about $12243 million. Except in
the year 2014, there is increased profitability of the company. In the year 2018, it recorded
$10073 million profit rates.

6GLOBAL MARKET CONTRIBUTION OF AMAZON
Figure 1: Annual report Amazon in the year 2018
(Source: sec.gov, 2019)
Figure-2 explains the current market condition of Amazon in the US market. In the
first quarter of the fiscal year 2019, the revenue earned by this company is $59.700 million.
Till 31st March 2019, earning per share of the company has increased to $7.09, which
indicates the market capitalization of the corporation has increased. In the second quarter of
2019, the revenue has recorded an increase of to$63.404 million (AMZN. nasdaq.com, 2019).
However, there is a decline in earnings per share of the company to $5.22.

7GLOBAL MARKET CONTRIBUTION OF AMAZON
Figure 2: Current market condition of Amazon
(Source: nasdaq.com.amzn, 2019)
Opportunities and scope of improvement in Amazon
Over the year, Amazon has adopted various technological improvements to increase
its market power. Recently, Amazon has released news to open about 3000 Go-stores by the
year 2021. Moreover, it is introducing drone delivery systems to avoid congestion in delivery.
It is also offering a cut in prices of whole food and retail products. It has even announced the
introduction of house robots to increase their revenue. However, it should address further
measure to increase its dominance in the market. Amazon should expand its region by
establishing physical stores around the suburbs and regional areas. This will help in
increasing competitiveness against the big retailers and engage the customers with the brand.

8GLOBAL MARKET CONTRIBUTION OF AMAZON
Moreover, it should improvise its technicalities in internet handling to reduce counterfeit
sales. Mergers with various e-commerce organizations can help the firm in improving its
market base. Amazon has increased its ventures with several retail chains such as the Zappos,
Pillpack.Inc, whole Foods Market, and Rings. Moreover, it is planning to improve its medical
supply chain with further improvement and is looking forward to merging with fuel supply
chains.
Influence of Amazon in the Global and Regional levels
Amazon has expanded its territory over several developing countries. It generates
employment for a majority of the American and developing country’s labor force. As per
records, 647,500 employees are currently working in Amazon (oecd.org. 2019). Amazon
generates revenue for the economy and contributes to the growth rates. It promotes and
introduces new brands to the world market. This boosts revenue and encourages new firms in
the market. This corporation has maintained an easy availability of food and consumer
products. As a result, it contributes to maintaining the inflation of the economy. This
organization provides education facilities in the far-flung places through its wide delivery
chain (Sadooghi et al., 2015). It tries to develop the education base and supports needy
children with donations. It connects the world market with a diverse culture with its
diversified product.
Conclusion
Thus to conclude, this can be implied that Amazon has diversified products and
services to increase its market function. It has justified market presence with high brand
loyalty that makes the company worthy of the current global ranking. Moreover, it adds to the
infrastructural development of the US economy. It is reliable and fast delivery services over
the regional areas have contributed to the development of these regions. Moreover, it has

9GLOBAL MARKET CONTRIBUTION OF AMAZON
expanded in the world market and has acted as a major contributor to development in those
countries.
References
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10GLOBAL MARKET CONTRIBUTION OF AMAZON
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