Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
Recently the Dow Jones index faced a drastic fall. This fall was partly because of the fears of inflation that were sparked by increasing employee wages. This is because employee wages have been stagnant in America for close to a decade now. The drastic short-term rise was attributed by many to be the result of […]
Widening Current Account Deficit The first and most important problem facing the Indian economy is the widening current account deficit or the CAD. The CAD refers to the difference between the exports and the imports, which is always a deficit for countries like India that are dependent on imports of oil for their economy. However, […]
Project integration management refers to the process of tying everything in place. Integration management deals with: Developing the Project Charter and Project Scope statement (Initiating Process Group), Develop Project Management Plan (Planning process group), Direct and Manage project execution (Executing Process group). Hence this is process that integrates all the disparate processes and provides a […]
The Internet has drastically changed in the past few years. Consumers have now become very aware of their privacy issues. Many consumers want to be in control of the data that they create and share online. Till now, the contracts used to be drawn by social media companies. Hence, they were heavily skewed to be […]
What is Accountability and the Need for it in the Healthcare Sector? A well functioning healthcare system encompasses the principles of diligent and reliable care, attentiveness to the patients and compassionate service from the caregivers, and most importantly accountability on the part of the healthcare providers. Taking the last aspect, which is the accountability of […]
Investors just can’t seem to get enough of Amazon. Even though Amazon is already the world’s fifth-largest company, investors believe that it is only just getting started! It already has revenues of $125 billion per annum. It is targeting revenues of more than $500 billion in the next few years. Startups have grown at this astounding pace earlier.
However, Amazon is no longer a startup. It is a fledgling company with a multi-billion dollar business. If Amazon can grow even at half the speed that it aims it, it will be the world’s most valuable company in no time! As students of good business practice, it, therefore, makes sense to study the business model being used by this very innovative company.
The value proposition provided by Amazon is simple. They offer the most convenience, widest range and the lowest prices. Their prices are so low that they have displaced Wal-Mart as being the leader is low price category! The amazing part about Amazon is that it provides goods and services at extremely low cost without compromising on quality by any means.
Amazon makes the lowest prices possible by leveraging technology. Firstly, it has leveraged technology in such a way that it does not have to stock inventory of any kind. While other stores are reeling under the massive cost burdens of stocking inventory, Amazon can afford to undercut the competition on this.
It is a mix of a retail company as well as a technology company. Unlike, retail companies, Amazon seldom hires stock clerks and floor managers. Their employees have high technological skills like data mining etc
Amazon has a diverse revenue model.
The revenue model of Amazon is therefore dynamic. It has been repeatedly venturing into newer areas. Also, technology is the backbone of these newer sources of revenue which many retailers had not thought about earlier.
The business model of Amazon is not very capital or human intensive. This makes it scalable. Amazon can easily enter another country and start selling products. Very little groundwork has to be done. This is the reason that Amazon went from being an American company to being a multinational very soon. This asset light business model is also preferred by investors who have pumped in billions of dollars for Amazon to beat its competition with its deep pockets.
Amazon faces a wide variety of competition from different types of companies. There are brick and mortar stores. Then there are other e-commerce sites and also video streaming sites like Netflix. However, none of these competitors seem to be formidable. Amazon is the aggressor is almost all lines of business and is snatching business away from others rather than defending its own turf.
Amazon has always been at the center of several technological advancements since its inception in 1994. In 2016, they have pioneered a new technology called contactless stores. These stores have been branded as “Amazon Go” stores. The unique selling point of these stores is that there are no humans involved. Amazon has achieved such high levels of automation, that they can run an entire departmental store without having any employees! It is technological advancements like these that will allow Amazon to reach its ambitious revenue targets. Although at first, the revenue targets seem ludicrous, Amazon seems to have a plan!
To sum it up, Amazon has a unique business model. The hybrid tech cum retail model was pioneered by Amazon in 1994. Ever since it has not let go of the first mover advantage. Even today, Jeff Bezos pays no dividends and reinvests all the extra profits back into the operations signaling that Amazon is still not a mature company and that it still preparing to grow rapidly.
Your email address will not be published. Required fields are marked *