Assigned to: Dr.Gamal Shehata.

Prepared by: Esraa Fahmy. (7008)

Thoraya Salama. (7020)
Sherif Wagdy. (7031)
Tarek Khaled. (7033)
 HISTORY
• November 1994 CEO Jeff Bozos and two associates
set up shop in a converted garage.
• Founder and Bozos opened the virtual doors of
Amazon.com's online store in July 1995 and began
selling public.
• In May 1997 Amazon.com completed its initial
public offering (IPO).
• April 1998 the company acquired online bookstores
in U.K. and Germany (Book pages and Telebuch):
first international expansion
• In 1999 the company launched its own auction site
• In 2000 Amazon.com launched amazon.co.jp and
amazon.fr (Japan and France)
• In 2002 e-commerce strategic alliances were
performed with Virgin and Office Depot.
• In January 2003 announced the Free Super Saver
Shipping
• September 2003 launched new Sporting Good
store.
 GOALS AND
OBJECTIVES
We seek to be Earth's most customer-
centric company, where customers can
find and discover anything they might
want to buy online, and endeavor to offer
customers the lowest possible prices.
 Amazon's Mission
statement
 Our vision is to be Earth's most customer
centric company; to build a place
where people can come to find and
discover anything they might want to
buy online.

 External Factor Evaluation
( EFE ) Matrix .

Key External Factors Weight Rating Weighted

Opportunities : score

1. Construction of an extensive community of buyers. 0.03 3 0.09

2. Growth of internet users in the next 5 years, predominantly 0.05 3 0.15

in the international market.

3. Amazon has its own proprietary technology and licenses 0.05 2 0.1
technology from other companies.

4. E-commerce expansion Asia and the pacific. 0.1 3 0.3

5. Internet taxes prohibited by the internet taxes freedom 0.1 3 0.3

act and its extensions.

6. It can partner with many e-com retailing firms. 0.1 3 0.3

7. Several product categories with high penetration of retail 0.12 4 0.48

on-line sales.
8. The firm can build partnerships with the public sector, as 0.05 4 0.2
it will use public libraries to provide a search option and
catalogue for potential users which will also cover the
antique and rare books (positive change in the business model
of the book market)
Threats .

1. Competition in both the retail and e-commerce 0.12 3 0.36

market is increasing (eBay, Barnes & Nobel, and Wal-
Mart).

2. Population segments not targeted to on-line sales 0.05 2 0.1

due to their lack of internet access.

3. possible rejection to on-line sales in 0.03 3 0.09

international markets if new taxes are levied

4. Competition will increase due to the low barriers 0.12 3 0.36

to entry in the market.

5. Weak economic performance of Germany and France in 0.08 2 0.16

the last year.

Total 1.0 2 . 99
Internal Factor Evaluation
( IFE ) Matrix :

Key Internal Factors Weight Rating Weighte

Strengths : d score

1. Amazon is the leading online-retailer regarding 0.15 4 0.6

media-products that educate and entertain.

2. Customer Relationship Management and Information 0.05 3 0.15

Technology both work as a driving force for Amazon’s
business strategy.

3. developed and upgraded technology: software and 0.05 3 0.15

hardware
4. Customer service support. 0.1 4 0.4

5. Corporate culture. 0.1 4 0.4

6. strong infrastructure: Effective automated 0.15 4 0.6

distribution centers
Weaknesses :

1. low finance performance (high debt level) 0.1 1 0.1

2. There is a risk to the brand image regarding the 0.05 1 0.05

product expansion for different products that are not
related to books, Amazon is the number-one online-
retailer, and the more product offerings might weaken
the brand due to the confusion it embeds on the
consumer.

3. It is dependent on external delivery firms that 0.1 1 0.1

carry out the delivery function that may lead to
uncontainable problems regarding the delivery service
and it may potentially increase costs.

4. Company offered free shipping might affect future 0.05 2 0.1

financial outcomes.

5. Risk of introduction of wrong new categories. 0.1 2 0.2

Total 1.0 2 . 85
 SWOT Matrix
• SO Strategies
•Amazon as the leading online retailer can build
partnerships with the public sector (public
libraries) S1,O8
•With it’s extensive community of buyers it can
make up new useful strategies along with CRM &
Information technology strategies O1, S2
•More intensive penetration of Asia & the pacific
as Amazon has strong infrastructure(effective
automated distribution centres) S6,O4
•ST Strategies
•Through CRM and info
technology population segments
that don’t have internet access
can reached by offline ways.
S2,T2
•
• WO Strategies
•Amazon can partner with strong, well image retail
firms in order to overcome the confusion of brands
other than books (broaden the image, also for free
shipping issues).
O6, W4,W2
•Public sector can provide Amazon with data about
sectors, (Data base), to help prevent targeting or
introducing new categories.W5,O8
•Looking for ways to reduce delivery cost, making
use of e-commerce expansion. W3,O4
•WT Strategies
•Strategies for Amazon.com
offline ways to increase people
access to broaden Amazon image
of not only being a book store
T2,W2
ncial Ratios Analysis ( December 2006 )
Growth rates % Company Industry S & P 500
Sales ( Qtr vs . year ago qtr ) 42.00 30.70 10.70
Net income ( YTD vs . YTD ) 39.80 33.40 14.30
Net income ( Qtr vs . year ago qtr ) 69.90 122.80 97.60
Sales ( 5 - year annual avg .) 28.77 24.03 7.75
Net income ( 5 - year annual avg .) 8.92 13.40 8.24
Dividends ( 5 - year annual avg .) NA 0.00 4.97

Price Ratios
Current P / E Ratio 69.7 46.7 21.7
P / E ratio 5 - year high 210.8 165.1 18.0
P / E ratio 5 - year low 33.4 22.2 3.4
Price / sales ratio 2.58 2.88 2.28
Price / book value 12.01 8.30 5.82
Price / cash flow ratio 45.60 32.00 16.40
Profit Margins
Gross margin 22.6 40.0 38.3
Pre - tax margin 4.7 11.3 14.2
Net profit margin 3.7 9.0 10.5
5 Yr Gross margins ( 5 - year avg .) 22.7 40.3 37.9
5 Yr pretax margins ( 5 - year avg .) 4.5 10.5 15.9
5 Yr net profit margins ( 5 - year avg .) 3.3 7.8 11.3

Financial conditions
Debt / equity ratio 0.02 0.06 1.39
Current ratio 1.3 1.8 1.4
Quick ratio 1.0 1.6 1.2
Interest coverage NA 1.5 27.2
leverage ratio 2.6 2.2 4.5
Book value / share 11.84 11.32 22.06

Investment returns %
Return on equity 22.8 19.9 20.7
Return on assets 8.2 -298.8 6.9
Return on capital 18.1 16.1 9.4
Return on equity ( 5 - year avg .) 36.1 24.8 16.2
Return on assets ( 5 - year avg .) 8.2 7.8 7.6
Return on capital ( 5 - year avg .) 18.3 14.5 10.3
Cont, of Financial Ratio Analysis:
Management Efficiency

Income / employee 37,325 67,173 75,397

Revenue / employee 1 million 779,493 814,514

Receivable turnover 27.0 21.0 14.4

Inventory turnover 10.6 7.0 9.2

Asset turnover 2.2 1.6 0.8

Date Avg . P / E Price / sales Price / book Net profit margin (%)
12 / 06 $80.40 1.56 37.90 1.8
12 / 05 50.90 2.37 79.73 3.9
12 / 04 31.40 2.72 -79.86 8.5
12 / 03 445.20 4.19 -20.48 0.7
12 / 02 -41.60 1.82 -5.42 -3.8
12 / 01 -7.90 1.26 -2.80 -17.8
12 / 00 -11.50 1.98 -5.75 -51.1

Data Book value / share Debt / equity ROE (%) ROA (%) Interest coverage

12 / 06 $1.04 2.89 44.1 4.4 5.0

12 / 05 0.59 6.02 135.4 9.0 4.7

12 / 04 -0.55 -8.18 -259.0 18.1 4.1

12 / 03 -2.57 -1.88 -3.4 1.6 2.1

12 / 02 -3.49 -1.69 11.1 -7.5 0.4

12 / 01 -3.86 -1.51 38.7 -34.0 -3.0

12 / 00 -2.71 -2.22 145.9 -66.1 -6.6

 CPM-Competitive Profile Matrix
Critical success factors weight
Amazon E- bay Barnes &
Rating Weighted score Rating
Nobel Weighted score
Weighted score Rating

Market position 0.11 4 0.44 4 0.44 3 0.33

Price competitiveness 0.05 3 0.15 0.15 2 0.1

3
Financial position 0.09 2 0.18 4 0.36 3 0.27

Service quality 0.11 4 0.44 3 0.33 3 0.33

Global expansion 0.08 4 0.32 4 0.32 3 0.24

Product diversity 0.08 3 0.24 4 0.32 4 0.32

Customer service 0.11 4 0.44 4 0.44 2 0.22

Brand awareness 0.16 4 0.64 4 0.64 3 0.48

Consumer loyalty 0.16 3 0.48 3 0.48 3 0.48

Organizational structure 0.05 3 0.15 4 0.2 2 0.1

Total 1.00 3.48 3.68 2.9

Key Factors
QSPM Weight International market penetration
4Product (Asia)
development

External
1. Construction of an extensive community of buyers.
0.03 4 0.12 3
2. Growth of internet users in the next 5 years, predominantly in the international market
0.05 4 0.6 0.09
3
3. Amazon has its own proprietary technology and licenses technology from other
companies. 0.05 2 0.1 0.45
4
4. E-commerce expansion Asia and the pacific.
0.1 4 0.4 0.13
5. Internet taxes prohibited by the internet taxes freedom act and its extensions.
0.1 1 0.1 0.33
6. It can partner with many e-com retailing firms.
0.1 0 0.3
0
7. Several product categories with high penetration of retail on-line sales.
0.12 3 4
8.positive change in the business model of the book market.
0.05 0.36 0.48
1.EBay, Barnes & Nobel, and Wal-Mart
0.12 0 0
2. Population segments not targeted to on-line sales due to their lack of internet access.
0.05 0 0
3. possible rejection to on-line sales in international markets if new taxes are levied
0.03 0 4 0 3
4. Competition will increase due to the low barriers to entry in the market.
0.12 0.124 0.09
2
5. Weak economic performance of Germany and France in the last year
0.08 0.482 0.24
3
Total
1.00 0.16 0.24
 Cont’ of QSPM
Key Factors Weight International market
penetration (Asia)
Product development

Internal
1. Amazon is the leading online-retailer regarding media-products that educate and
entertain. 0.15 4 3
2. Customer Relationship Management and Information Technology both work as a
driving force for Amazon’s business strategy. 0.05 0.6 0.45 0
3. developed and upgraded technology: software and hardware
0.05 0 3 4 0.2
4. Customer service support.
0.1 0.15 0
5. Corporate culture.
0.1 0 2 3
6. strong infrastructure: Effective automated distribution centers . 0.15 0.23 0.34
1. low finance performance (high debt level) 0.45 0.6
0.1 1 2
2. There is a risk to the brand image regarding the product expansion for different
products that are not related to books 0.05 0.1 0.2
3. It is dependent on external delivery firms that carry out the delivery function that may
lead to uncontainable problems 0.1 0 2 01
4. Company offered free shipping might affect future financial outcomes.
0.05 0.2 0.1 0
5. Risk of introduction of wrong new categories.
0.1 0 2 1
Total 1.00 0.1 0.1
4.24 4.24
 SPACE MATRIX
 The SPACE matrix is a management tool used to analyze a
company. It is used to determine what type of a strategy a
company should undertake. The Strategic Position & Action
Evaluation matrix or short
 A SPACE matrix is a strategic management tool that focuses on
strategy formulation especially as related to the competitive
position of an organization.
 The SPACE matrix is broken down to four quadrants where each
quadrant suggests a different type or a nature of a strategy:
 Aggressive
 Conservative
 Defensive
 Competitive

 Space Matrix
•* Y axis: - Financial Strength: +3
• - Environmental Stability: - 2 => Y coordinate: + 1 STRATEGY:
AGGRESIVE
•* X axis: - Competitive Advantage: - 1 => X coordinate: +5
• - Industry Strength: +6

•
 BCG Matrix
 The BCG matrix helps the company allocate resources and is used as an
analytical tool in brand marketing, product management, strategic
management, and portfolio analysis.
 It has two controlling aspect namely relative market share and market growth.
 This is simplistic in many ways ,each cell has its own name as follows.
 Dogs. These are products with a low share of a low growth market. They do
not generate cash for the company, they tend to absorb it. Get rid of
these products.
 Cash Cows. These are products with a high share of a low growth market.
Cash Cows generate more than is invested in them. So keep them in your
portfolio of products for the time being.
 Question marks . These are products with a low share of a high growth
market. They consume resources and generate little in return. They
absorb most money as you attempt to increase market share.
 Stars. These are products that are in high growth markets with a relatively
high share of that market. Stars tend to generate high amounts of
income. Keep and build your stars.

 BCG Matrix
INTEL:31%

STARS QUESTION MARKS

NA 69%

DOGS
CASH COWS
 Grand Strategy Matrix
 Grand strategy comprises the "purposeful employment of all
instruments of power available to a security
community".
 It indicate the time period over which long-range
objectives are to be achieved.
 Grand strategy matrix has 4 alternatives:
Ø Stability.
Ø Growth.
Ø Combination.
Ø Retrenchment.
The Grand Strategy
Matrix

Potential Strategies:
- Market
Development
- Market Penetration
-Product
Development
- Backward
Integration
- Concentric
Diversification
 IE Matrix
 TheInternal-External (IE) matrix is another strategic
management tool used to analyze working conditions
and strategic position of a business. The Internal
External Matrix or short IE matrix is based on an
analysis of internal and external business factors which
are combined into one suggestive model.
 The IE matrix is based on the following two criteria:
Ø Score from the EFE matrix -- this score is plotted on the y-
axis
Ø Score from the IFE matrix -- plotted on the x-axis
•
IE Matrix