Covid 19 Pandemic Amazon Performance

CASE STUDY 6

Case Study 2

Overview

The company selected for this exercise is Amazon. Amazon could, in basic terms, be described as an internet-based company that offers for sale a wide range of products and items to buyers from across the world. Some of the products the company offers for sale are inclusive of, but they are not limited to; consumer electronics, automotive products, sporting tools, watches and jewelry, personal-care items, groceries, beauty products, books and stationery, etc. The company also provides web services. The company, which operates in the online retail industry, was established in the year 1994 and has over time grown to become one of the largest companies in the world in terms of market capitalization and revenues. The present CEO of the enterprise is Andy Jassy (Amazon Annual Report, 2021). Jeff Bezos, who also happens to be the company’s founder, presently serves as the executive chairman of the company. The company is headquartered in Seattle. Amazon has a number of competitors in the online retail industry space. These are inclusive of e-bay, Alibaba, and Walmart.

Market Capitalization and Stock Price Comparison

Table 1 below captures the market capitalization data for Amazon over a specified time period.

Date

Market Capitalization

$1,035.48B

$1,239.20B

$1,712.30B

Table 1

Table 2 below captures the stock price data for Amazon over a specified time period.

Date

Stock Price

Table 2

The COVID-19 pandemic was first designated a global health concern by the World Health Organization on 30th January 2020 (Das, 2022). From this point onwards, most countries deployed various strategies to limit the spread of the disease. These strategies were inclusive of, but they were not limited to; implementation of travel bans, institution of lockdowns, etc. (Das, 2022). Businesses from across the world were affected in diverse ways. However, it should be noted that businesses were not affected in a similar manner by COVID-19 disruptions. Amazon was able to handle the negative impacts of the pandemic relatively well. As a matter of fact, as demonstrated in table 2 above, the company’s market capitalization grew significantly during the said period. Market capitalization, as Berk, DeMarzo and Harford (2021) observe, is indicative of “the total market value of a firm’s equity” (748). The company’s stock price increased from $100.21 at the onset of the pandemic to $169.2000 in early November 2021. This could be attributed to the fact that Amazon essentially became the go-to place for persons from across the world over the two years under consideration – as governments sought to limit the spread of the virus by implementing lockdowns and curtailing public gatherings. These measures meant that persons could no longer visit brick-and-mortal establishments for routine shopping.

SWOT Analysis

Amazon has a number of strengths and weaknesses that could have an impact on its ability to accomplish its business objectives. The company also faces a number of threats and could pursue a number of opportunities in its external environment.

a) Strengths

Brand Image and Name: Amazon’s brand image and name happen to be rather strong in comparison to those of competitors. To a large extent, most persons from across the world can be able to identify the brand and are likely to have interacted with the company at some point.

Customer Focused: As it points out in its website, the company has over time deployed various innovations in an attempt to ensure that the needs of customers are sufficiently addressed. As a matter of fact, it points out that its “mission is to be Earth’s most customer-centric company...” (Slater, 2022). Towards this end, the company lists ‘Customer Obsession’ among its 16 key leadership principles.

Cost-Leadership: Amazon aims to offer its various products and items at low prices. This is a feat that the company has managed to achieve by working on reining in costs on multiple fronts. For instance, the company has very low operating costs owing to the fact that it does not maintain brick-and-mortar premises (Das, 2022).

b) Weaknesses

Working Conditions: Those working in the various amazon warehouses have in the past complained that the online retailer is not committed to the provision of a conducive work environment. For instance, according to Kelly (2021), workers in this case indicate that “they have too few bathroom breaks, which are all timed, excessive productivity goals and an unsafe working environment.”

Business Model: Amazon’s business model, i.e. online retail, can be easily imitated. This raises doubts about the company’s ability to compete in an effective manner going forward as competition continues to heat up.

c) Opportunities

Emerging Markets: There exists plenty of opportunities for amazon to explore in emerging markets. This is especially the case as certain regions, i.e. in the African continent, benefit from enhanced internet connectivity.

Acquisitions: Amazon could further enhance its market share by acquiring companies and enterprises in the ecommerce space. This could especially be useful in its efforts to boost regional presence and rein in competition.

Expanded Product Portfolio: The company could seek to offer for sale a wider selection of products. Areas it could consider exploring include vehicles and house/land sale.

d) Threats

Competition: The company faces competition from various online retailers including Amazon, EBay, and Alibaba. Enhanced innovative capabilities on the part of the said competitors could erode Amazon’s market share.

Government Regulation: Given that Amazon is a multinational corporation serving multiple jurisdictions, changes in government regulation in some countries could significantly affect its operations. This is more so the case in relation to taxation and ecommerce/cybercrime laws.

Number of Employees

The company’s most recent financial statement indicates that it has in its employ a total of 1,608,000 employees (both fulltime and part-time) (Amazon Annual Report, 2021). This is significant increase from the pre COVID-19 period. As of Dec 31st 2018, the company indicated had in its employ a total of 647,500 employees (both fulltime and part-time) (Amazon Annual Report, 2018).

Policy and Practice Changes in Response to COVID-19

Like many other enterprises, Amazon made various changes on the policy and practice fronts. For instance, the company extended help and assistance to certain stakeholders such as its employees and customers. The said assistance was inclusive of bonuses to employees serving on the front-line, employee sick pay increase (specifically those diagnosed with COVID-19), adaptation of item return policies (i.e. to give customers more time to send back items), etc. (Amazon Staff, 2022). The company also implemented a work-from-home format to protect its employees and partners. Amazon also sought to further protect customer interests during this difficult period by partnering with 3M to rein in price gouging (Amazon Staff, 2022).

I am of the opinion that the approaches deployed by Amazon were effective. The extension of assistance to customers, the community as well as employees could be seen as the continued fulfillment of the company’s responsibility and accountability to key stakeholders. This also benefited the company on the reputational front. The work from home policies adopted by the company secured the wellbeing of the company’s employees and key partners – ensuring operational continuity during and after the pandemic. By partnering with 3M to prevent price gouging, Amazon further enhanced its capabilities in as far as the advancement of customer interests and enhancement of customer experience are concerned.