Business Futures: Analyzing Social Media's Impact on Amazon

This report examines Amazon's utilization of social media platforms, including Facebook and Twitter, to enhance brand awareness, increase sales, and gain a competitive advantage. The analysis delves into the merits and demerits of social media marketing, specifically focusing on Amazon's approach. The report investigates Amazon's financial statements over a three-year period to assess the impact of social media on the company's profit margins, providing insights into the trends and implications. The report also explores the future of social media and its potential impact on businesses, offering recommendations on how companies can strategically position themselves to capitalize on these changes. The report concludes with a comprehensive overview of Amazon's social media strategies and their overall effect on business performance and future prospects.

Business futures

Table of Contents
Introduction.....................................................................................................................................3
1a. Evaluating the social media as core competence.......................................................................3
a.) Organisation and its core competence...............................................................................3
b.) Merits and demerits of social media.................................................................................3
c.) The way social media is used by Amazon.UK to gain competitive advantage.................4
d.) Industry example...............................................................................................................4
1b. Two key social media platforms................................................................................................5
a.) Identifying as many social media platforms as possible...................................................5
b.) Choose two key ones and analyze them............................................................................5
c.) industry examples to support your analysis......................................................................5
2a. The impact of social media on the profit margin of Amazon....................................................6
a.) Research Amazon’s financial statements for the past three years.....................................6
b.) The trend in Amazon’s net profit margins over the three years........................................8
c.) The impact of social media on Amazon’s profit levels.....................................................9
2.b The future of social media and its implications for business..................................................10
a.) The current impact of social media on the bottom line...................................................10
b.) Changes affect businesses in the near future...................................................................10
c.) Position company to take advantage of the changes.......................................................10
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................12

Introduction
In present time, social media marketing is playing significant role among people and
companies in all over the world. There are large number of companies who are advertising
products and services on social sites in respect to create brand awareness and enhance sales
(Armstrong, Kotler and Brennan, 2015). Customer are highly influenced by the methods used
by companies for promoting products on social networking sites. The present research is based
on Amazon company who is continually using various social networking platform to create
brand awareness and profits. This report will cover, merits and demerits of using social
networking sites. Apart from this, the trend in Amazon’s net profit margins over the three years
will be discussed.
1a. Evaluating the social media as core competence
a.) Organisation and its core competence
Amazon is one of the top electronic commerce and cloud computing company which has
become an popular in internet business. It is known as one of the largest internet retailing
company in all over the world which sells wide range of products from books to electronic
worldwide. Product of the firm are displayed with great advertising publish with the use of press
release. A core competence is the result of a specific unique set of skills and production
techniques which deliver value to the customers. These types of competence provide the firm to
a widespread variety of market (Marchand, Hennig-Thurau and Flemming, 2018). The firm
focus on making strong relationship with its customer in respect to retain them for longer time.
Here, Amazon use social media in order to keep regular communicate with its customers. They
send promotional emails to customer through providing various offers. Along with this, Amazon
take review of its customers on Facebook, Twitter and another social media platform. Superior
quality products and services is provided by Amazon. Its online services are convenient, reliable.
Firm actively use social networking sites in respect to respond its customers on time, and for
advertising products and services. Through responding on social networking sites made easier
for the firm in enhancing their customers satisfaction level.
b.) Merits and demerits of social media
Social media has basically change the way firms interact with its public and its potential
customers. Use of social media by firms drive lots of benefits that are as follows:

Increase brand awareness: With the use of social networking site Amazon can enhance its
business visibility (Leung, Bai and Stahura, 2015). Along with this more and more customers
came to know about company and its quality products. They can easily see the information of
product and price which help them in differentiating their firm products from others.
Enhance sales: Sales can be increase of the firm if company use social networking sites in an
effective manner. When customers watch any product with offer on Facebook or other social
sites, their buying behaviour get influence and they make purchase decision. It lead to increase
sales of the firm and enhance profit.
Some of the disadvantage of social networking sites are as known as unclear social media
marketing strategy which lead to reduce benefits. Along with this, negative feedback can directly
impact the firm and image (Leung, Bai and Erdem, 2017). It is because social media users have
free rein to post whatever they want therefore. If customer is not satisfied with the products then
they may put negative feedback on their Facebook page.
c.) The way social media is used by Amazon.UK to gain competitive advantage.
Social media is known as one of the effective platform that provide huge opportunities to
companies in order to advertise and promotes their products. Amazon company is receiving
benefits through effectively using social networking sites. For instance, Amazon is getting into
Instagram and Pinterest territory with its new Spark (Tiago and Veríssimo, 2014). It leads to
create awareness among customer about its new products and wide range of offers provided on
it. At present Amazon have over28.7 million like on its Facebook page. Company use to put
daily post on twitter and Facebook. Along with this firm also respond to customers comments
given on post in order to show their activeness on Facebook.
d.) Industry example
For example, Forever 21 used to promote its product though email marketing. They send
mail to their potential customers on occasion and festival with offer which encourage company
to make purchase decision. (Kim, Lim and Brymer, 2015) Apart from this, there are many
companies who focus in making relationship with customers on social networking sites such as
Facebook, twitter etc.

1b. Two key social media platforms
a.) Identifying as many social media platforms as possible
The large number of social media platform which are used by people in all over the
world. These all different platform provide many opportunities to the firm in respect to create
awareness, sales and profit (Zeng and Gerritsen, 2014). Some of the top social medial platform
which are mostly used by people and companies are known as Facebook, Twitter, Google+,
Instagram, LinkedIn, snapchat, periscope, email marketing, My space, you tube etc.
b.) Choose two key ones and analyze them
Two key social media platform that gains lots of popularity and highly used by people
are Facebook, Twitter.
Facebook: It is one of famous social media tool which was launched in 2004. It has
become one of the unbeatable phenomena because of its fastest growing number of users. It
leads to provide wide range of opportunities to companies in order to promotes their products
and enhance sales (Panagiotopoulos, Shan and McConnon, 2015). Daily large number of people
are daily creates account on Facebook. Along with this firm can easily create their company
page and post and share their products images and information daily which can easily attract
customers. From the survey conducted in 2015 it is found that 52% of customers were
influenced by Facebook at the time of making online purchase decision
(https://www.thinkcreativegroup.com/blog/how-effective-is-facebook-advertising-the-truth-
about-facebook-roi).
Twitter is known as the valuable marketing tool which help in grabbing the attention of
large number of customers. It leads to make easier for the firm to build relationship with
customers and encourage them to make purchase decisions.
c.) industry examples to support your analysis
There are many companies who are using these social networking platforms for creating
brand awareness and enhancing profit. For example, the Forever, 21 twitter account uses their
tweets for promoting their products through showcasing them in great images. Apart from this,
Amazon has taken the social aspect of twitter and ran with it (Kumar, Choi and Greene, 2017).
The way they communicate with customers and informal presentation style help in making sure
that their followers know that they are part of a conversation.

2a. The impact of social media on the profit margin of Amazon
a.) Research Amazon’s financial statements for the past three years
Income statement
AMAZON.COM INC
(AMZN) Cash Flow Flag
INCOME STATEMENT
Fiscal year ends in
December. USD in
millions except per
share data.
2015-12 2016-12 2017-12
Revenue 107006 135987 177866
Cost of revenue 85061 105884 137183
Gross profit 21945 30103 40683
Operating expenses
Sales, General and
administrative
7001 9665 13743
Other operating
expenses
12711 16252 22834
Total operating
expenses
19712 25917 36577
Operating income 2233 4186 4106
Interest Expense 459 484 848
Other income
(expense)
-206 190 548
Income before income
taxes
1568 3892 3806
Provision for income
taxes
950 1425 769
Other income -22 -96 -4
Net income from
continuing operations
596 2371 3033
Net income 596 2371 3033
Net income available
to common
shareholders
596 2371 3033
Earnings per share
Basic 1.28 5.01 6.32
Diluted 1.25 4.9 6.15
Weighted average
shares outstanding
Basic 467 474 480

Diluted 477 484 493
EBITDA 8308 12492 16132
Balance sheet
AMAZON.COM INC
(AMZN) Cash Flow
Flag BALANCE SHEET
Fiscal year ends in
December. USD in
millions except per
share data.
2015-12 2016-12 2017-12
Assets
Current assets
Cash
Cash and cash
equivalents
15890 19334 20522
Short-term
investments
3918 6647 10464
Total cash 19808 25981 30986
Receivables 6423 8339 13164
Inventories 10243 11461 16047
Total current assets 36474 45781 60197
Non-current assets
Property, plant and
equipment
Land 9770 13998 23718
Fixtures and
equipment
18417 25989 38387
Other properties 1866 2454 6468
Property and
equipment, at cost
30053 42441 68573
Accumulated
Depreciation
-8215 -13327 -19707
Property, plant and
equipment, net
21838 29114 48866
Goodwill 3759 3784 13350
Intangible assets 762 854 3371
Other long-term
assets
2611 3869 5526
Total non-current
assets
28970 37621 71113

Total assets 65444 83402 131310
Liabilities and
stockholders' equity
Liabilities
Current liabilities
Accounts payable 20397 25309 34616
Accrued liabilities 10384 13739 18170
Deferred revenues 3118 4768 5097
Total current
liabilities
33899 43816 57883
Non-current
liabilities
Long-term debt 8235 7694 24743
Capital leases 5948 7519 13183
Deferred taxes
liabilities
2016 1787 1994
Other long-term
liabilities
1962 3301 5798
Total non-current
liabilities
18161 20301 45718
Total liabilities 52060 64117 103601
Stockholders' equity
Common stock 5 5 5
Additional paid-in
capital
13394 17186 21389
Retained earnings 2545 4916 8636
Treasury stock -1837 -1837 -1837
Accumulated other
comprehensive
income
-723 -985 -484
Total stockholders'
equity
13384 19285 27709
Total liabilities and
stockholders' equity
65444 83402 131310
b.) The trend in Amazon’s net profit margins over the three years
From the above mentioned financial statement it is clearly reflected that company that
profit of Amazon company is increasing respectively year by year. Gross profit of the firm in
2015, 2016 and 2017 was 21,945, 25,917 and 36,577. It clearly shows that company has made

good profit through increasing sales of its product. The reason of increase in the profit is
effective social media marketing strategies performed by the firm (Liu, Lee and Chen, 2018).
c.) The impact of social media on Amazon’s profit levels
Social media has put great impact on the profit level of Amazon. At present Amazon has
over 28.7 million likes in its Facebook page. It is an incredible figure, looking at its news feed it
is easy to understand reason of its popularity (Hyder, 2017). Amazon replies to its customers on
comments which are left by customers on its post. Along with this it does this all activities
quickly, politely, provides wide range of information and links. There are few examples below
(https://etaileast.wbresearch.com/amazons-engaged-buyers-drive-social-media-revenue).
Twitter: At present the Twitter campaign is more effective in order to promote the products and
services. The firm has more than 2.7 million followers toward Amazon and its additional
services are prime video, Amazon music etc.
These all lead to put impact on the firms profit as because people came to know about
Amazon product and services. Through putting attractive post on the Facebook, company
become more aware of the product and services which motivate them to make purchase decision.
Along with this people use this social networking daily and through looking over the company
post again and again with exciting offer motivate them for purchase

2.b The future of social media and its implications for business
a.) The current impact of social media on the bottom line
Following the current impact of social media on the bottom line business it is analysed
that in future social media will become more interesting tool for the business.
Online networking is giving media stages to make content and circulate thoughts. It enables
people to make substance and add to more extensive discussions which is required an all around
financed media organization (Leung, Bai and Erdem, 2017). Presently all that is required is a
PC, tablet or cell phone associated with the Internet. The Arab Spring uprisings in 2011
connected past the nearby circumstance to include a worldwide crowd.
Facebook and LinkedIn these have incredible lead age arrangements worked for a portable
audience. This is a major open door - and company would prefer not to pass up a major
opportunity for. It's vital to manufacture a solid online networking publicity muscle now.
Advertisements don't need to be a piece of each crusade, yet company ought to dependably think
about it. Technologies are upgrading as it leads to bring more innovation in social networking
platforms. In future social media platform provide lots of opportunities to the firm and also
improve their way of working. However, there are some prospects for business outside the social
media such as traditional method of marketing which are also effective. Due to new technologies
there is scope that companies can use another medium that business can ride in the next five
years.
b.) Changes affect businesses in the near future
These all changes can affect business in the near future. It will provide lots of
opportunities to the firm in respect to gain profit. In future companies get lots of opportunities
for marketing their products and services. There are many new technologies will be introduced
in the market in respect to advertise the products, therefore companies will not remain dependent
on the social networking sites
c.) Position company to take advantage of the changes
The firm can take advantages from this through using social networking sites in an
effective manner. Before adverting products and services on social networking platform it is
important to understand targeted audience and the requirement of customers (Leung, Bai and
Stahura, 2015).

. For the firm it essential to make that can directly contact to customers on Facebook so that it
will become easy for them to understand their requirements and prepare products and services.
Online networking, social media platform, lead to changed the business scene, both for
organizations that have embraced them and for the individuals. As defined, online networking is
the place individuals share content with a extensive gathering of people, and attention on the
substance, while long range informal communication is more fixated on discussions and
gatherings with shared interests. Facebook, which straddles the line separating the two kinds of
communications, has 600,000 customary clients worldwide and invites organizations,
associations, and brands to use its stage to interface with their crowd.
All interpersonal organizations have fused a measure of web-based social networking,
enabling clients to wind up guardians of the intriguing substance they discover, sharing
connections, pictures, and short individual stories (Marchand, Hennig-Thurau and Flemming,
2018). Organizations those figured out they way to make content and take part in discussions are
as of now 'in the stream' – and to an ever-increasing extent, web clients have the desire they will
have the capacity to collaborate with their most loved brands. Organizations that have grasped
this have a regularly developing favourable position over the individuals that don’t have the
same.
Conclusion
From the above report it is concluded that, there are many social networking sites that
can be used by the firm for promoting products and services. Sales can be increase of the firm if
company use social networking sites in an effective manner. When customers watch any product
with offer on Facebook or other social sites, their buying behaviour get influence and they make
purchase decision. Further it is concluded that company can make good profit with the use of
uses social networking sites. Through responding customers feedback on time and resolving
their issues lead to increase the satisfaction level of customers.

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