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Ecem Akyildiz, Samuel Lee, Izzy Ouellette, Dillon Scott
Agenda
● History
● SWOT Analysis
● PEST Analysis
● 2 Solutions
● Conclusion
“ Amazon has the unique ability to launch and run entirely
new types of businesses while simultaneously extracting
value from existing businesses. Amazon’s journey forward
will likely be marked by a series of transformations, as it
continues to pursue its vision unafraid of white space,
business model innovation, or renewal.”
HISTORY 1979 -
1995 -
1999 -
2005 -
2013 -
Amazon Acquisitions and Investments
SWOT Analysis for Amazon
Problems
●●
Competition
Google self-driving car (develop technology, not sell car)
Caterpillar develop autonomous vehicles for mining
UPS “UPS invests more in technology than any other company in the delivery business, and we’re always planning for the future”
FedEx creating aircraft to carry cargo
Milestones in U.S. State AV Regulation
Solution - Drones● 5 year plan to increase operating profit● Continue lobbying at current prices for drone legalization● Use Nevada and Florida as models● Break-even point from lobbying reached between 2016 and 2017
PEST Drone AnalysisPolitical - Need more U.S. State AV Regulation (currently only Nevada, Florida, & Michigan allow AVs)
Economic - Requires heavy investment in Lobbying for AV Regulation ($3.4 billion)
- Increase in R&D expenses ($1.73 billion)
- Increase in Marketing expense
Social - Consumers are wary of this new technology
- Loss of jobs
Technological -Still developing new technology, nothing like this has been done before
Pros● Cost savings compared to other
methods● Quicker delivery times● Less reliance on other companies
for deliveries ● Expected increase in sales
Cons● Won’t be fully accepted for years● Limited range● Costly lobbying● Increase in marketing costs
Implementation Strategy
1. Maintain constant lobbying efforts2. Use the two states which already
legalized drones as model and test platform
3. Perfect marketing within these states4. As more states legalize drones,
produce more drones to go along with demand
Challenges● Competition delivery companies using drones at a cheaper cost
● Developing improved drones to travel further and hold more weight
● Animals as well as other destructive obstacles
● Future laws further regulating drones
Fees for Deliveries
Drone Revenues and Expenses Forecasts
Years 2014 2015 2016 2017 2018
Drone Revenue $3,192,320 $17,557,760 $28,730,880 $39,904,000 $52,673,280
Expenses $1,461,685 $8,039,267 $13,155,165 $18,271,062 $24,117,802
Lobbying Expenses $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000
Drone Income $730,635 $8,518,493 $14,575,715 $20,632,938 $27,555,478
Total 5 Year Earnings before Tax $72,013,258
Advertising Year 1 Year 2 Year 3 Year 4 Year 5
Internet advertising campaign #1 $1,250,000 $1,000,000 $600,000 $600,000 $300,000
Outdoor advertising campaign #1 $550,000 $375,000 250,000 $250,000 $0
Tv advertising campaign #1 $750,000 $600,000 $500,000 $500,000 $500,000
Newspaper advertising campaign #1 $50,000 $50,000 $0 $10,000 $10,000
Internet advertising campaign #2 $1,250,000 $1,000,000 $600,000 $600,000 $300,000
Outdoor advertising campaign #2 $550,000 $275,000 $150,000 $150,000 $0
Tv advertising campaign #2 $750,000 $600,000 $500,000 $500,000 $500,000
Newspaper advertising campaign #2 $50,000 $25,000 $0 $10,000 $10,000
PR activities $350,000 $150,000 $150,000 $150,000 $150,000
Total $5,550,000 $4,075,000 $2,750,000 $2,770,000 $1,770,000
Solution - Amazon Web Services(AWS)● IT Infrastructure Service-Cloud Computing● Pay as you go model● Offers Broad Functionality on a Global Scale● Reliable Data Management● Emphasis on developers
Pros● Large Industry Growth● Expand Customer Base● Available Capital● Long term profitability is high ● market leader ● Usage of amazon’s existing data
centers
Cons● Untested market● Require large investment in fixed
capital asset● Short term profitability is low due
to large capital investments
Current Infrastructure of AWS
Data Centers
Expand Data Centers to Increase Data storage and throughput
Necessary to keep up with increasing demand
Implementation StrategyYear 1 Create a basic version of AWS and offer as freeware
Develop and implement the new infrastructure for AWSStart expanding Data centers
Year 2 Based on demand, invest in expanding data centers
Year 3 Continue to expand data centersRefine platform offering based on user feedback
Year 4 Continue the expansion of data centers based on demandIf the expansion of AWS is not profitable, consider liquidating data centers to an IT-competitor such as azure
Year 5 Depending on the increasing demand of AWS, continue the expansion of data centers
Challenges
● Strong competition in PaaS offerings● Risk losing large investments in Fixed Capital Assets should demand
not be as expected● Risk of losing customers with basic needs to the free package of AWS
Projection for AWS
AWS Expansion 2013 2014 2015 2016 2017 2018
Rev from AWS $3,108,000,000 $3,418,800,000 $3,760,680,000 $4,136,748,000 $4,550,422,800 $5,005,465,080
Operating expenses $2,435,000,000 $2,735,040,000 $3,008,544,000 $3,309,398,400 $3,640,338,240 $4,004,372,064
Expansion of Data centers $0 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000
Earnings Before Income Tax $673,000,000 $583,760,000 $652,136,000 $727,349,600 $810,084,560 $901,093,016
Projected Income StatementYears Current 2014 2015 2016 2017 2018
Sales Revenue
AWS Revenue
Operations Expense
Operations Profit
Other Income
Interest Expense
Taxes
Long Term Debt Expense
Net Income
Any Questions?
Appendix I
Number of total packages shipped 232,000,000
86% of items under 5 pounds 199,520,00020% of customers within 10 mile radius 39,904,000
2 trips per package 79,808,000
Number of drones needed 9,138
5 year cost per drone $4,000
Cost of total drones needed 36,550,492
Trips for drones Per Year 79,808,000
Deliveries per drone per year 8,736
Number of drones needed 9,138
Costs Per Drone Number of Drones
Appendix II
Appendix III
With Drones Cost of Drones
Total Products Sold 232,000,000 232,000,000
# Packages 199,520,000 199,520,000
86% of items sold (under 5lbs) 20% 20%
% Live within a 10 mile radius of city center 39,904,000 39,904,000
Target Population’s cost $2.00 $0.18
Revenue / Cost of Delivery $79,808,000 $7,182,720
Total Revenue $72,625,280
Appendix IV
Ratios 2013 2014 2015 2016 2017 2018
Fixed Asset Turnover Ratio 679.99% 704.71% 704.15% 709.92% 722.09% 744.72%
Gross profit Margin 0.37% 0.74% 0.85% 1.48% 2.24% 3.62%