Comprehensive Analysis of Amazon's Business Model: Capstone Project

This integrated capstone project analyzes the business model of Amazon.com, focusing on its e-commerce operations and diverse product offerings. The assessment explores Amazon's business environment, including industry and competitive analysis, company resources, and global business strategy. It delves into Amazon's business model, e-business strategies, diversification, and financial performance, using the provided income statement and cash flow statement. The project also examines staffing, people management, organizational structure, policies, ethics, and social responsibility. Recommendations are provided to improve business structure and overall efficiency. The analysis highlights Amazon's expansion, continuous innovation, and its position as a leading online retailer, emphasizing the importance of customer experience, pricing, and technological infrastructure.

Running head: INTEGRATED CAPSTONE PROJECT
Integrated Capstone Project
Name of the Student:
Name of the University:
Author’s Note

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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................3
Industry and Competitive Analysis.............................................................................................3
Company Resources and Capability............................................................................................4
Global Business Strategy.............................................................................................................5
Business Model of Amazon.........................................................................................................6
E-Business Strategies...................................................................................................................7
Diversification Strategies.............................................................................................................8
Financial Condition and Analysis................................................................................................8
Staffing and People Management..............................................................................................10
Organizational Structure and Core Competencies.....................................................................11
Policies and Procedures of the Business....................................................................................12
Ethics, Value and Social Responsibility....................................................................................12
Recommendations..........................................................................................................................13
Conclusion.....................................................................................................................................14
Reference.......................................................................................................................................16

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Introduction
The main purpose of the assessment is to analyze the business model which is followed
by Amazon.com which is engaged in online business of providing different kinds of products to
the customers. The assessment considers the business environment of Amazon.com considering
different area of performance of the business (Bocken et al. 2014). The assessment would be
identifying certain problems which is faced by the management of the company and also suggest
certain recommendations which can help the business to further improve the business structure.
Background of the Company
Amazon.com is an American based Multinational Company which is engaged in the
business of providing e-commerce facilities, artificial intelligence and cloud computing software.
The company is famous for its online site and effectively provides a large variety of products to
the customers. The company is known to be the largest online store in the world in terms of both
revenue generated by it and in terms of market capitalization (Amazon.com. 2019). In addition to
this, the company is also regarded as the second largest employer in USA. The company has a
significant presence over the retail market as more and more customers subscribe to the online
site for shopping. Initially when the company had started it was just a mere bookstore and
operated form a garage and today’s world it offers all kinds of retail products for the customers.
The company is a perfect example how proper expansion strategy can bring about success in a
business. The business in current ear offers a larger variety of retail-based goods to the customers
and also offers cloud computing services to the users. This shows that the business is still
pursuing expansion strategy and also further diversifying the products which is offered by the
business.

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Discussion
Industry and Competitive Analysis
The company which is now regarded as one of the giants in the online retail business was
just a store which offered books to the customers. The company started off as a small business
and went public with its business. The company invested significantly on development of
software, technologies and innovation so that the business can keep up with the changes in the
online retail business (Casadesus‐Masanell and Zhu 2013). The company made its first initial
public offering in 1997 for $ 18 per share and later on the company further expanded the
operations of the business by acquiring other small businesses such as Drugstore.com, Pets.com
and Overstock.com (ChannelAdvisor. 2018). The market is highly competitive in nature as more
and more e-commerce sites are coming up with sales promotion strategies
Some of the key competitors of the business which is Flipkart and Snapdeal e-commerce
websites. The overall level of competition in the market is immense as there are a lot of different
e-commerce retail sites coming up which is the main reason that the level of competition has
increased significantly.

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Figure 1: Global Net Revenue generated by Amazon
Source: (Statista. 2019)
The above figure effectively shows the revenue which is generated by the business during
the four years period which is considered from 2014 onwards. The revenue o0f the business on
global basis is shown to be on rise. The figure also shows that the business is able to generate
maximum profits from online stores of the business.
Company Resources and Capability
The company is known to have access to the best resources in terms of capital and
technicians for the purpose of further improving the technological level of the business. Some of
the resources which is available at the disposal of the company includes very large and skilled

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employee force which can effectively serve different operations of the business, a sound
technology when it comes to online marketing and commerce, one of the best distributing
networks which makes expanding prospects into new markets much easier. In addition to this,
the company has also developed a brand name for the business and most of the customers
consider Amazon to be most reliable and efficient. These are the main reasons which has led to
the expansion of the business and it also provides opportunities for further expansion of the
business into new regions and new product line.
Global Business Strategy
The management of the company puts significant emphasis on the global operations
which are carried out of USA. This is done because a major portion of the revenue of the
business is generated from such a source. The revenue which is generated by the business is
maximum from US but a significant portion is also contributed by the rest of the world. The
company follows similar guidelines as in US that is to offer best quality of products to the
customers at a reasonable price (Bharadwaj et al. 2013). The business also flows a global
expansion strategy which means that the management of the company is trying to reach out to
different regions so that it can further expand the customer base of the business and thereby give
themselves a chance to earn more revenue for the business (Lambert and Davidson 2013).

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Figure 2: Sales achieved by Amazon on the basis of Region
Source: (Statista. 2019)
The above figure makes it clear that a majority of revenue of the business is accumulated
from operations based on US but a significant portion which is represented by black bar charts is
also earned by the business from international operations (Spieth, Schneckenberg and Ricart
2014). Therefore, it is essential requirement of the business that appropriate strategies are
followed so that global customers are also considered as a potential source of revenue generation
(Thomas, Smith and Diez 2013).
Business Model of Amazon
The business model which is formulated by the business aims at providing the best
quality of services and reach out to as many customers as possible. The business model also aims

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to incorporate and expand the e-commerce line of operations of the business. The process which
is followed by the business aims to appropriately expand the operations of the business in terms
of online transactions and also offline store sales. The business model has also over the years
diversified the operations of the business bringing in new products as per the demand of the
business. In a nutshell, it can be said that the business model of Amazon is formulated
considering several other companies business model. Amazon identifies its success by
considering the aspects of customer experience obsession, lowering prices, stable tech
infrastructure, and free cash flow generation. This helps the business of Amazon to serve more
and more customers in the market and thereby meet the needs of majority of the customers.
E-Business Strategies
The business of Amazon mainly operates as an online store which provides a variety of
different customer-based products and is known to be the largest online retailer. The
management of the company is dedicated to improve the technological level of the e-commerce
system which is being used by the business. The management recognizes that widespread
changes are taking place in digital media and therefore it is imperative that the business of
Amazon also bring about significant changes in the online system (Madsen and Walker 2015).
As per the policy of the business, the management adopts the system which is most advanced in
terms of technology and has an user friendly interface which can help the business. The
management also has a policy in place which requires system developers to make continuous
changes and upgrades in the e-commerce system for the benefit of the consumers and also for
handling any glitches.

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Diversification Strategies
Amazon offers a wide range of products to the customers in current era but the business
had initially started as a small retail bookstore which has significantly expanded the operations of
the business overtime. This indicates that the management of the company has effectively
diversified the operations and activities of the business. The process of diversification refers to
the process by which the management of company increases the line of activities which is
conducted by the business (Goerzen, Asmussen and Nielsen 2013). The business has now
successfully diversified the activities of the business by offering products like clothes,
electronics, Food products and other similar items of retail nature. The business also follows the
policy of expanding the operations of the business on the basis of region where the product of the
business would be most successful. The decisions regarding diversification is taken considering
all these aspects. The company is known to have a continuous evolving model and therefore the
business can appropriately make decisions regarding diversification if a business.
Financial Condition and Analysis
The financial condition of the business of amazon can be analyzed effectively by
considering the financial performance of the business which can be identified from the ann8ual
reports of the business for the past and current periods. The financial performance of the business
is considered to be an important aspect as this the basis on which shareholders decide whether to
invest in the company or not. The income statement which is presented in the annual reports of
the business is considered and the same is shown below:

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Figure 3: Income statement of Amazon Ltd
Source: (Sec.gov. 2019)
The above income statement is prepared by the management of the company on
consolidated basis so that appropriate revenue and expenses for the entire period can be
demonstrated showing both domestic and global sales which is achieved by the business. The
income statement for the business shows that the sales revenue of the business is on the rise
which suggest that the business is able to appropriate sales from both domestic and global. The
sales of the business are shown to be more for 2018 in comparison to 2017 and 2016 which

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suggest that the overall scale of operations of the business has enhanced. However, it is to be
noted that as the scale of sales of the business increases so does the costs of the business and the
same is shown to have increased significantly. The income statement which is prepared by the
management of the company also shows that there has also been a hike in the net income which
is generated by the business. This shows that the business is growing and has a positive growth
in profits which is a positive sign for the business. The cash flow statement which is included in
the annual report of the business shows that the business has a positive cash flow which shows
that the liquidity position of the business is appropriate and therefore the business can undertake
any project and also meet current obligations effectively.
Therefore, the analysis of the annual report of the business of amazon effectively shows
that the business is performing. However, the management of the company needs to ensure that
the costs of the business are kept as low as possible. This way the business would be able to
generate more profits and also maintain the overall efficiency in the business.
Staffing and People Management
The company is known for its contribution to employment in USA as the business is
regarded as the second largest employer in USA. As the business is following an expansion
growth model, more and more employees would be required by the business for managing the
activities of the business. The business follows a model that skill and semi-skilled are recruited
so that an overall level of efficiency can be enhanced (Noe et al. 2017). As per the annual report
for the business, it is clear that the sales of the business are increasing which also means that the
business is growing. Therefore, in order to meet all activities and operations, the management
needs to have proper staffing recruiting practices and development programs so that the staffs are
well organized and trained in handling customers.

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The employees are paid a fixed amount of salary and also would be entitled to incentives
if the employee is able to meet and exceed his targets. There is a board of directors who takes all
the major decisions and includes decisions regarding the remunerations of the employees of the
business (Thompson 2013). The organizational culture which is developed in the business is
appropriate and suits the business requirements effectively and ensure that all the employees of
the business are satisfied with the work of the business.
Organizational Structure and Core Competencies
The organizational structure of the business of Amazon is designed in such a manner that
all the major decisions are taken by the board of directors of the company. The major decisions
are taken by the board of directors and the same are then communicated to the staff members and
these acts as guidelines which needs to be followed while conducting the activity of the business.
The board is also responsible for establishing an appropriate internal control in the business and
also for preparing the financial reports of the business. The core business activity which is
performed by the business is related to online retailing for different types of activities of the
business. The business has effectively diversified the line of operations so that the overall
revenue of the business can be expanded. However, the chart which is represented in figure 2
shows that the business acquires significant amount of revenue from online sales and therefore
the core activity of the business can be said to be online retailing. The business has taken all the
necessary steps for the purpose of ensuring that more improvements can be brought about un the
e-commerce site of the business. The management of the company is dedicated to improve the
technological level of the e-commerce system which is being used by the business. This can help
the business to further enhance the revenue which is generated by the business and also the level
of efficiency of the business.

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In recent times, the business has also entered the markets of software, cloud computing
software. These activities are being undertaken so that the business has more than one line for
generating revenue.
Policies and Procedures of the Business.
The top-level management of the company has set aside certain policies and corporate
regulations which the employee need to follow. The policies which are established in the
business needs to be followed effectively by the employees. In addition to this, the work pressure
of the employees is divided into shift timings so that efficiency in the operations of the business
is maintained. In addition to this, the employee also has a sale target which needs to be achieved
by them. In addition to this, the management of Amazon ltd also follows budgeting approach for
forecasting and planning the revenue and expenses which is related to the future activities of the
business.
Ethics, Value and Social Responsibility
As per the ethical standards which are established, the employees and directors of
amazon is expected to follow all rules and regulations of the land and do not engage in any
activity which can bring about bad name to the business. Amazon.com employees should always
act lawfully, ethically, and in the best interests of Amazon.com while performing their duties.
There are certain major rules and regulations which needs to be followed by the employees such
as cyber security rules, consumer law, rules of the land and similar other rules.
The business also has a social responsibility to contribute to the needs of the society as a
whole and ensure that no activity is undertaken which can cause damage to the society as a
whole. The company effectively contributes to the employment needs of the economy and ensure

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that no such activities is undertaken by the business which can cause any harm to the
environment. The value of the business is to ensure that the consumers get the best quality of
products at the lowest price possible. This would also help the business to secure profitability in
the long run and thereby further expand the operations of the business.
Recommendations
As per the above discussion regarding the business model which is followed by Amazon,
it is clear that there is certain area where the management can make amendments for further
improving the business structure. These amendments would also have an impact on the revenue
which is generated by the business. The business model of Amazon is already versatile and
therefore minor amendments is required to be made in the business model which is formulated
by the business. Some of the recommendation which is suggested to the management of the
company is given below:
 The management of the company needs to follow a low-cost business model in order to
reduce the costs of the business which is shown to have increased significantly with the
sales of the business. If the costs of the business can be brought down then the profits of
the business would further enhance. The low-cost model which is followed by the
business would also attract more customers to the company and therefore enhance the
turnover of the business.
 The management should focus more on online retail business as major portion of the
revenue is generated from such a line. Therefore, it is recommended that if more
resources are allocated to online retail business that the management would be able to
generate more revenues in the long run.

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 The management can expand the operations of the business further in order to enhance
the sales and spread the name of the business in new market. The brand name of the
business also plays a vital role in expanding the operations of the business.
 The management of the company is also moving forward by introducing more products
in the market. The business has diversified the operations by entering into entertainment
industry by introducing Amazon Prime which would include different movies and Tv
Series.
 The business is expanding the reach of the market by it online Amazon Application and
thereby attracting more customers to the business. The business also needs to focus on
brining in more branded products in its range so that different group of brand loyal
customers can be brought into the frame.
Conclusion
The above discussion effectively shows analysis of the business model of Amazon which
is mainly engaged in online retail business. The discussion shows different area of the business
model and also includes a financial analysis of the performance of the business which has
improved significantly over the last few years. In addition to this, the above discussion also
includes a recommendation part which shows the area in which the management of the company
needs to make amendments in order to further improve the business structure and thereby also
enhance the efficiency level of the business. The factors which are identified above have serious
impact of the business and the management of Amazon.in need to take proper measures so that
necessary amendments can be brought about for improving the corporate structure of the
business. If the management of Amazon Inc implements the above-mentioned measures that the
operational structure of the business would further improve and thereby also improve the

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efficiency of the business. This will also enhance the revenue which is generated by the business
and ensure that the profits which is generated by the business meets the expectation of the
clients.

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