FIN-330-21EW2 2-1 Final Project I Milestone One CMadera PDF

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Final Project I Milestone One...

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Clarence Madera FIN-330-X2177 Corporate Finance 21EW2 Module 2-1 Final Project I Milestone One

Amazon.com is an internet-based corporation founded by Jeff Bezos in Seattle, Washington in 1994 and offers multifaceted services ranging from digital streaming to ecommerce. Bezos contended from its start that the site was not merely a retailer of consumer products. He argued that Amazon.com was a technology company whose business was simplifying online transactions for consumers (Hall 2012). They have grasped the attention of consumers worldwide with their fast-shipping offering, competitive prices, and vast selection of goods and services that can be credited to their Day 1 mentality that puts top priority on consumers needs. And according to Amazon’s mission statement “We strive to offer our customers the lowest possible prices, the best available selection, and the utmost convenience” they offer the consumer affordable prices, varied selection, and top convenience (Amazon). Consumers prefer Amazon.com marketplace not just for the variety of goods and services but the convenience through innovative fulfillment centers throughout the U.S. Or by pioneering offerings such as paid subscribers receiving free shipping on purchases or media streaming for paid consumers to be in control of their purchases, Amazon is setting the standard within the industry. It does not stop there. Amazon without a doubt has earned a lot of consumers through their offerings and most noticeably the free shipping, 2-day or next day shipping that the company has been ramping up efforts to launch its own delivery network, via growing fleets of airplanes, delivery drones and vans (Rattner 2020). Then there is the Amazon Sustainability initiative that has a sustainability plan to be Earth’s most customer-centric company by implementing new business practices such as renewable green energy, electronic fleet vehicles,

or shipment zero that pledges to reduce 50% of packaging waste by 2030 (Amazon 2021). All these initiatives require financial planning to assess the financial health of Amazon Inc to validate which short-term and long-term budgetary plans. With the wide variety of products and services that Amazon has to offer it is unlimited market base of consumer demands. What is amazing about these figures is that Amazon was able to survive the global health crisis due to COVID-19 and came out with greater profits. Reviewing the income statements for periods 2019 and 2020 you notice an increase in revenue sales of 20.5% and 37.6% respectively. This data will be instrumental in developing a strategic plan to funding future goals of the business where discretionary funding needs should be minimal. Take for example, during the 2020 global health crisis service sales for Amazon increased by 9.6%, product revenue increased by 21.5%. This evidence, when prepared accordingly, will provide a strategic financial plan to fund a large-scale delivery fleet. While Amazon is making strides in becoming a consumer powerhouse, it may come at the cost of losing some consumers. Social and economical claims have been made against Amazon citing unfair workplace and environmental impacts fast shipping have consumers not satisfied with their practices. Since the COVID-19 outbreak in 2020 consumers have switched to e-commerce, Amazon.com, and the influx of product sales at fulfillment centers have created unfair and unhealthy work environments for workers. There are even instances where 8 Amazon warehouse workers have died from contracting COVID-19 (Kaplan 2020). Amazon made improvements to health and safety standards and these changes require financial resources to implement. Then there is the Amazon Inc green initiative. Carbon offset credits is a method used to fund a green initiative such as planting trees or water conservation based upon how much carbon is produced throughout your annual operations and billionaire, business owners use this

method to provide proof to consumers that they are doing their part to preserve the environment. But critics claim that carbon offsets are mostly a convenient way for corporations and billionaires to justify their pollution, rather than reducing their emissions (Huddleston 2021). In 2019 Amazon Inc had said it emitted 51.17 million metric tons of carbon dioxide last year, the equivalent of 13 coal-burning power plants running for a year (CBS 2020). These are significant findings and while that’s a big responsibility, the good news is that there are plenty of wonderful, sustainable alternatives to Amazon (Castonguay 2021). As consumers replace brick-and-mortar shops with e-commerce there is still the evolving demands of consumers that Amazon Inc must focus on. As part of their Day 1 initiative management must develop financial strategies to continue to address social and environmental concerns. Amazon Inc is without a doubt the leader in online purchases of products and services and that is proven with its Return on Equity. In 2018 Return on Equity was 23.4% and it dropped in 2019 to 18.2%, but to then rise to 22.8% in 2020. This rebound proves consumers demands can be met through e-commerce transactions and Amazon Inc is able to generate profits from investment activities.

References: Soomo Learning (2020) People, Planet, and Profit Retrieved from: www.webtexts.com Hall, Mark (2012, July 11) Amazon.com American Company Retrieved from: https://www.britannica.com/topic/Amazoncom Amazon (2021) Amazon/About us Retrieved from: https://www.aboutamazon.com/about-us Rattner, Nate (2020, January 19) This map shows how Amazon’s warehouses are rapidly expanding across the country Retrieved from: https://www.cnbc.com/2020/01/19/map-of-amazonwarehouses.html Amazon (2021) Amazon Sustainability Retrieved from: https://sustainability.aboutamazon.com/ Kaplan, Ezra (2020) Eight Amazon warehouse worker dies from COVID-19 Retrieved from: https://www.nbcnews.com/news/us-news/eighth-amazon-warehouse-worker-dies-covid-19-n1212546 Huddleston Jr, Tom (2021, November 5) Why billionaire like Bill Gates and Jeff Bezos buy carbon offsets – and how they work Retrieved from: https://www.msn.com/en-us/money/markets/why-billionaires-likebill-gates-and-jeff-bezos-buy-carbon-offsets-e2-80-94-and-how-they-work/ar-AAQm6pr? ocid=BingNewsSearch CBS (2020, June 23) As Amazon’s carbon emission surge, it pledges $2 billion to fight climate change Retrieved from: https://www.cbsnews.com/news/amazon-carbon-emissions-up-15-percent-pledge-2billion-climate-change/ Castonguay, Audrey (2021) Want to shop sustainability online? Try these eco-friendly & ethical alternatives to Amazon Retrieved from: https://blog.wholesomeculture.com/eco-friendly-ethicalalternatives-to-amazon/...