Accounting for Managerial Planning and Control: Amazon Business Report

This report provides a comprehensive analysis of Amazon's business operations, focusing on managerial planning and control. It begins with an executive summary and an introduction outlining the report's objectives. The report delves into Amazon's background, including its mission, vision, ownership structure, and organizational structure. It examines the company's products and services, current strategies, and utilizes SWOT analysis and Porter's Five Forces to assess the competitive landscape. Furthermore, the report explores potential changes in Amazon's objectives and strategies, presents a balanced scorecard, and evaluates its overall performance, particularly its financial aspects. The methodology employed is secondary research, drawing data from journals, books, websites, and Amazon's annual reports. The report concludes with a summary of key findings and recommendations for Amazon's future.

Accounting for managerial
planning and control

1
Executive Summary
Amazon is a big online retail firm having huge amount of resources. This report analyses
the background of the company and the same time it discusses organisational structure of
the firm. Along with this, the report analyses the products and services that is provided by
Amazon. This report also showcases the strategies used by the organisation in their modern
day business. At the same time, it is also describing the strengths, weaknesses,
opportunities and threats that are present in their internal environment. It also does the
industry analysis with the help of porter’s five forces tool. The changes that Amazon has
planned for itself has been elaborated. It also defines the balanced scorecard for Amazon
highlighting different aspects of the business. At last the performance of firm on different
aspects has been showcased especially the financial performance.
Methodology
For preparing this report, the methodology that has been chosen is secondary research. The
data has been collected from various Journals, Books and Websites. The annual report of
the Amazon has been served as a basis of analysing the performance of the company on
various aspects like financial, social and environmental aspects.

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Contents
Introduction...........................................................................................................................................1
Background of company........................................................................................................................1
Mission and vision.............................................................................................................................1
Ownership structure and organisational structure..................................................................................2
Ownership structure...........................................................................................................................2
Organisational Structure....................................................................................................................2
Headquarters and Subsidiaries...........................................................................................................3
Company products and services............................................................................................................3
Strategy.................................................................................................................................................4
Current strategy.................................................................................................................................4
Swot analysis.....................................................................................................................................5
Porter’s five forces............................................................................................................................6
Changes in the company current objectives and strategy...................................................................7
Balanced scorecard............................................................................................................................7
Performance..........................................................................................................................................9
CONCLUSION...................................................................................................................................13
REFERENCES....................................................................................................................................14

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Introduction
The aim of the paper is to prepare the business report for the in-depth knowledge of the
business for planning and control of the company as all these details are required by the CEO
of the company. The company on which the report is Amazon, the company is well-known as
the largest Internet retailer across the world (Ritala, Golnam & Wegmann, 2014). The report
is prepared on behalf of the team works related to the management department of the
company as the CEO is looking to find out the facts and further explaining the implications
related to the findings. This business report includes the details related to the company with
the current strategy with the help of the different theories which include SWOT analysis,
Porter’s five forces model and the balanced scorecard. Along with this, the performance of
the Amazon Company is also evaluated which include the cost management, financial
performance, social performance and environmental performance.
Background of company
Amazon.com is performing the business as Amazon in an American electronic commerce and
cloud computing company. The company was established by Jeff Bezos in 1994 with the
headquarters in Seattle, Washington. Amazon is known as the largest internet retailer across
the world and this is evident from the revenue and market capitalization. In addition to this,
the company sell some of the end products in the market and due to which they have the
separate retail websites for US, UK and many other areas across the world (Simon, 2011).
Mission and vision
Mission: - The mission statement of the company is that the company strive to offer the
products to the customers in the lowest possible prices with the best available selection with
the utmost convenience. This shows that the company majorly focuses on the variables of
price, selection and convenience (Amazon, 2017). This shows the major characteristics of the
company corporate mission: - lowest prices, best selection and the effective convenience.
Vision: - The vision of the company is to be earth’s most customer centric company where
the customers can easily search for anything that they are looking to buy through online mode
(Amazon, 2017).

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Ownership structure and organisational structure
Ownership structure
The ownership structure of the Amazon Company is the public corporation because the
organisation offers their shares in the market. This is the fact that the company started as the
sole proprietorship but slowly and gradually the company expanded their business operations
and then they started working as the public company (Alder & Elmhorst, 2012). The structure
of the company includes numerous shareholders that are connected with the company. The
four major shareholders of the company include Jeff Bezos (CEO); he is holding approx.
78.88 million shares in the company. Andrew R. Jassy is another shareholder who is holding
90,231 shares within the organisation. According to the analysis, Jeffery Wilke and Jeffrey
M. Blackburn are also considered as the major shareholders of the company with the holding
of 10,000 shares directly and 56,040 indirectly shares and 42,874 of those shares directly, and
20,000 indirectly respectively (Miller & Bosman, 2011).
Organisational Structure
The organisational structure of the Amazon Company is classified as the hierarchical. The
senior management teal consist of the two CEOs, three Senior Vice presidents with one of the
worldwide controller who are mainly answerable for the different aspects of business with the
direct reporting to the CEO of company that is Jeff Bezos (Bharadwaj, El Sawy, Pavlou &
Venkatraman, 2013). The below given image reflects the organisational structure of the
company.
S h a r e h o ld e r s o f c o m p a n y
Jeff Bezos
Andrew R. Jassy
Jeffery Wilke
Jeffrey M.
Blackburn

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The organisational structure of the company remain highly flexible which means they can
easily accept the changes that are taking place in the external environment of the market.
Headquarters and Subsidiaries
The headquarters of the company are located in Seattle, Washington, United States.
Presently, the company owns more than 40 subsidiaries which include Zappos, Shopbop,
Audible, Goodreads, Teachstreet, Diapers.com, Kiva Systems and many others.
Company products and services
Amazon Company offers the wide range of products and services in the market. The products
that are offered by the company include several media, baby products, apparel, consumer
electronics, beauty products, kitchen items, watches and jewellery and many others. In
addition to this, the company offer the different types of services in the market to their
customers (Kimble & Bourdon, 2013). These services include Amazon prime membership
service, web series services, amazon games and many others. The company is offering all
these products and services with the online mode as they display all the products on their
website from where the customers can easily order or make the purchase of products.
This is found that all the products which are offered by the company are somewhere
demanded by the customers in the market. Though, the most profitable category of products
that is offered by the company includes electronics, clothes, baby products, books and many

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others. The reasons behind the rise in the demand of the products as these products are
consumed by customers on regular basis (Weill & Woerner, 2013).
Capital investment projects
Amazon Company has invested in numerous projects citing the state of their present and
future business. They have acquired more than 128 companies in different parts of the world
(Hooker, 2011). They are also making investments in the technology like the artificial
intelligence and automation technologies. They have also invested heavily on the data
management software and technology. Since data is the future of the online retail industry
hence the company aims to grab as much data as they can so as to understand the consumer
behaviour and the have the control over the market dynamics.
Strategy
Current strategy
Amazon being such a large company had to face many kinds of challenges. In order to
overcome the challenges they are facing as well as to gain competitive advantage over the
rivals, Amazon needs to take use of the effective strategies. It is essential that company have
a clear generic strategy along with the need to implement it in a better manner (Kantor &
Streitfeld, 2015). It is seen that the numbers of people that company has to handle is very
large hence strategic planning becomes more important. In order to achieve its objectives
some of the strategies that company is using are:
 Acquisition: In a last decade or so company has invested a lot in the acquisition
process. In order to expand in the international markets they have chosen this as their
major strategy. This has not helped them in increasing their scope of business but it
has also helped them in increasing their market reach (Combe, 2012).
 Market development: Following this strategy amazon is expanding its business into
many new countries. Recent expansions in the Asian market have proved to be very
successful for Amazon. As a part of intensive strategy they have captured almost all
the large markets in different parts of the world (Baden-Fuller & Haefliger, 2013). In
this process they are establishing new retail websites that is corresponding to new
nations.
 Market penetration: They are also strengthening their business units so as to penetrate
deeper into the markets. In this process they have used aggressive marketing

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campaign so as to build their image and attract more numbers of people towards the
business of the firm. This will help them in increasing their sales (Laudon & Traver,
2013). Pricing is the major tool using which they are planning to penetrate in the
market.
 Cost leadership: One of the major reasons for the success of the Amazon is attributed
to its use of cost leadership strategy. Due to low pricing, company has been able to
penetrate deeper in the market. It also gives them advantage over their rivals (Sorescu,
Frambach, Singh, Rangaswamy & Bridges, 2011). For example it was the cost
leadership strategy that helped the company in gaining the advantage over the rivals
in the country like India. It almost killed the Indian online retail giant Flipkart by
taking use of this strategy.
 Diversification: Along with the cost leadership strategy, they have been using
diversification as the major part of the strategy. It is offering a huge variety of
products to its customers. This enables them to attract people from different sections
and age group of the society. Every product range targets a different set of customers
(DaSilva & Trkman, 2014).
Swot analysis
For understanding the internal environment of the company, SWOT analysis can be an
effective tool. SWOT analysis of the company is as follows:
Strength
 It is having a huge brand name in the international market which helps them in
achieving their organisational objectives.
 Amazon is having a wide product mix and hence they are capable of attracting large
numbers of customers towards their business (Mithas, Tafti & Mitchell, 2013).
 In the industry, Amazon is having the highest revenue which helps them in their
expenditure.
Weaknesses
 It is having an easily imitable business model that can be copied by any firm with
the help of investors.
 It is having limited penetration in the markets that developing since it has till now
focus on the big markets.

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 Brick-and-mortar presence is limited for the company. This weakness has limited
the company’s ability to attract customers towards certain kind of product that is
more sellable in the physical stores than through the online sites (Stone, 2013).
Opportunities
 They have a huge opportunity to penetrate deeper into the markets that are
developing.
 Company need to have some of the brick and mortar stores so as to increase their
product range.
 It should promote measures that help in increasing the sales of the company especially
the products that are not performing well. This can be easily done with the help of
product evaluation on the basis of demands of the customers (Chesbrough, 2011).
Threats
 The biggest threat is of data privacy. Since the number of cybercrime activities have
increased in the past few years hence the company needs a strategy to limit the threat
of data privacy.
 Imitation is another bigger problem for Amazon as any company with huge amount of
capital could imitate their business.
 There are many companies that are coming into the online market. Especially the
retail companies that were following the brick and mortar form of business have also
started to come into the online retail business (Iyer & Henderson, 2012).
Porter’s five forces
In order to understand the industry condition, the use of Porter’s five forces can be very
effective:
 Bargaining power of customers: The bargaining power of the customers is on the
higher side. This is the reason why the company also has to adopt customer centric
approach. Since the customers have become highly informed and hence increases
their power (Adler & Elmhorst, 2012). On the other hand they have low switching
cost and high number of substitute options which increases their bargaining power.
 Competitive rivalry: The numbers of companies have also increased in the market.
There are highly aggressive firms that are taking use of various types of strategies to
capture the larger part of market (Kimble & Bourdon, 2013). Since with the help of

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supply chain there are many companies which are reducing the cost of the company
hence it is dangerous for the company.
 Bargaining power of suppliers: This force is on the lower side as the numbers of
suppliers are too large in the industry. In some of the products the suppliers are less
hence they enjoy a greater bargaining power (Chen, Chiang & Storey, 2012). There is
moderate forward integration as well as the sizes of the suppliers are also moderate.
 Threat of substitute: Due to low switching cost and high availability of the substitute
products, this threat is on the higher side (Sorescu, Frambach, Singh, Rangaswamy &
Bridges, 2011). Apart from this the cost of substitute is low which gives other
companies to take the market from the other retailers.
 Threat of new entrants: Since the cost of investment in the online market is less hence
many new companies could emerge in the market. But at the same time the brand
development need huge amount of cost to be involved hence it is not easier for the
firm to do successful business in the industry. On the other hand high economies of
scale also restrict the easy entry of any new online retailers (Sorescu, Frambach,
Singh, Rangaswamy & Bridges, 2011).
Changes in the company current objectives and strategy
On evaluation of the position and strategy it can be said that company needs to make changes
in the strategy as well as the objective. Currently the company’s focus is towards the cost
leadership but they must also focus towards the new market development (Bharadwaj, El
Sawy, Pavlou & Venkatraman, 2013). It is recommended that company should look towards
the developing markets. Apart from this, the company is also focused towards the long term
acquisition but they also need to acquire some of the company that works in the form of
Brick and mortar. This is necessary for dealing with the competitors like Walmart which has
recently came into the industry.
Balanced scorecard
Particular Target Measures Indicators Initiatives
Financial
perspective
 To increase the
revenues by
offering
products on
minimum
 Return on
Assets
 Value of
shareholders
 Number of
visitors on
 Return on
Equity
 Increase in
profits
 Return on
 Cost leadership
strategy
 Improvement in
its online
operations.
 Availability of

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lowest prices.
 To enhance
number of
customers
 To decline the
operational
costs and
utilization of
resources.
website of
Amazon.com.
assets
 Sales of
products
products on
lowest possible
prices.
Customer
Perspective
 Fully Customer
satisfaction
 Development of
customer
loyalty
 Improvement in
service offering
 Number of
visits on
Amazon’s
website.
 Customer base
 Customer
feedback and
reviews
 Satisfaction
among
customers
 Market
coverage/shar
e
 Customer centric
strategies
 Offer a wide
range of products
 Shopping
convenience
 Business
expansion in
developing
nations.
Internal
Process
 To enhance
internal
management
 To retain skilled
staff
 To enhance
online
operations
 Management of
inventory and
warehouses
 % of retained
staff
 Inventory levels
 Quality of entire
process.
 Employee
turnover rate
 Satisfaction
among
customers
 Availability of
needed stock
 Just-in-time
inventory
 Benefits to the
employees
 Acquisition
strategy
Learning
and Growth
 Innovation and
continuous
improvement
 Development of
 Efficiency of
operations
 Service delivery
standards
 Participation
level of
employees
 Employee
 Implementation
of new training
programs
 Innovative

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human
resources
 Information
flow
satisfaction
level
 Customer
ratings and
loyalty
processes
 Quality measures
Performance
The primary source of the revenue of Amazon Inc. is the sale of its broad range of goods and
services across the world. Over the last three financial years i.e. from 2015 to 2017, the sales
had grown continuously and this has in turn led to increase in the net profits of the company.
Also due to increase in the operations, the operating cost of the business has also increased
over the last 3 years. The overall operating cost of the business included the cost of sales as
well as the other operating expenses. Although there was rise in the total operating cost and
individual cost of sales of business from 2015 to 2017 but the proportion of cost of sales in
relation to the overall sales has declined which was the major contributing factor towards the
rise in the overall profitability of the business of Amazon Inc. (Amazon, 2017).
2017 2016 2015
Revenue 177866 135987 107006
Increase in Revenue
30.80
% 27.08%
Operating Profit 4106 4186 2233
Increase in operating
profit -1.91% 87.46%
Net Profit 3033 2371 596
Increase in Net Profit
27.92
%
297.82
%
Cost of Sales 111934 88265 71651
Operating Expenses 61826 43536 33122