Introduction
Amazon started from a low economic background when it commenced its operations as an online bookseller in 1994. Its founder, Jeff Bezos, operated under the proclamation of becoming big fast. He understood the unexploited affluence of the Internet when he began the company. Jeff and his spouse settled for Seattle as the prime location for the firm since it was the center of technological advancement and would not tax many clients attributable to the sparse population of Washington. The earliest operations of the company happened in a garage. Most investors were doubtful about the company’s continued success, and some believed it would ultimately go bankrupt (GreyB, 2021). On the contrary, Amazon has continued to rise in the industry and has expanded from selling only books to trade in nearly any product and providing various services.
In 1997, Amazon had its Initial Public Offering, where the company obtained over 50 million dollars. The amount raised through the public offering gave the corporation a face value of more than 430 million dollars. In 1998, it extended beyond books to incorporate music compact discs and, eventually, electronics, toys, and tools (DePillis & Sherman, 2021). In 2007, Amazon initiated the Kindle e-book reader, followed by the Fire in 2011. In 2006, Amazon established cloud computing packages, a studio in 2010, and the online marketplace for artistry in 2013. It has also purchased several businesses over the years, including Audible.com, Ring, Twitch.tv, Alexa.com, IMDB.com, AbeBooks, Goodreads, Whole Foods Market, Annapurna Labs, Kiva Systems (now known as Amazon Robotics), and Zappos. The management of Amazon should make amicable resolutions to identified problems and mitigate possible risks to ensure that the corporation maintains its leading position in the online market.
Business Profile
Amazon, the world’s major online store, is headquartered in Seattle, Washington, United States. Three chief executive officers lead Amazon. Jeff Bezos acts as the company’s top executive officer, while Jeff Wilke and Andy Jassy serve as the company’s global consumer and web services CEOs, correspondingly. The chief financial officer is Brian Olsavky, while Werner Vogels is the chief technology officer (Cuofano, n.d.). Jeff Bezos has segmented the company into three divisions: Amazon online services, marketplace, and Amazon Prime. He refers to them as the business’s three masts. Although Amazon began as a book-selling site, it quickly extended into other sectors, for instance, consumer technology, cloud computing, logistics, entertainment, and media, boosting its value to over a trillion dollars in a short time.
One of Amazon’s strengths is that it does not stagnate but has developed throughout time and experimented with new ideas. Therefore, Fast Business magazine named it the most inventive company in 2017, and Forbes rated the corporation as the third most advanced in the same year. It was also ranked third on the Massachusetts Institute of Technology’s list of innovative businesses in 2017, just behind Nvidia and SpaceX (GreyB, 2021). Amazon is obsessed with one thing: its consumers. The firm is focused on meeting its consumers’ needs and requests. Consequently, it has experimented with novel services, products, and any item that the management considers useful to its customers. Amazon’s online supply is the company’s lifeblood. This solid basis enables the company to experiment with other sectors, for example, web operations, advertising tasks, and Amazon prime, all of which are far more lucrative than the online store.
Many consumers are uninformed that Amazon now provides more than merely selling books. The advertising unit is a juggernaut and one of the few that can strongly compete with Facebook and Google. The advertising division created 6 billion dollars in the first half of 2018. With Amazon’s robust structure and breadth of offerings, more businesses are ready to pay for promotion facilities. Amazon Prime has been a subscription service that offers unlimited free delivery, film, music, and TV program streaming, boundless reading collections, special bargains, and savings on groceries, among other benefits. In addition, Amazon has started delivering security gadgets to Volvo, Chevrolet, GMC, Cadillac, and Buick vehicles to combat design theft (D&B Hoovers, n.d.). These vehicles are required to be of the 2015 model year or later. While this service is not currently available everywhere, premium members have access to it in 37 cities.
Amazon Web Services (AWS) began as an experiment in 2000 and evolved into a business worth more than $17 billion in 2017. Amazon recognizes the promise of web services and has taken a firm stance toward AWS. Amazon launched over 80 new services and features in 2011, increasing to 160 in 2012 and close to 300 in 2013. The company has ten AWS areas worldwide, including a dedicated government zone called GovCloud. Amazon Web Services was the company’s most profitable business in 2017. Its highest revenue emanated from providing computers, databases, storage, and other amenities to government organizations, companies, and learning institutions. Google, Microsoft, IBM, and Oracle are Amazon’s major competitors in this area (Chaffey, 2021). As earlier stated, Amazon commenced its public operations in 1997. It is a Bullish-rated stock ranked on Nasdaq under the consumer services group. Its ticker symbol is AMZN, and in January 2019, the stock price was about 1,671 dollars per share, valuing the company at 816,000 million dollars. Amazon’s market capitalization surpassed one trillion dollars in September 2018 (Amazon, n.d.a). On the same note, the company’s share price peaked at $2,051 per share. Amazon’s share price has increased more than 11,200 percent since its first public offering.
Amazon has continuously increased its income throughout the years. Its revenue was $89 billion in 2014 and grew to $233 billion in 2018, a remarkable 162 percent rise. The company lost $241 million in 2014 but subsequently became profitable in subsequent years. Its net income was 10 billion dollars in 2018. Over the years, Amazon has continually invested in its assets. From $56 billion in 2014 to $163 billion in 2018, the company has risen significantly (Amazon, n.d.b). As seen in its report of cash flows, the firm has not been stingy with its investments and capital expenses. The net investment cash flow represents an outflow, indicating that the firm spent over what it got in 2014. The company used or invested 6 billion dollars in 2014; by 2018, that figure had increased more than twofold to $13 billion. It invested significantly higher in 2017, approximately 27 billion dollars.
Overview
Amazon was started in Washington in 1994 before reconsolidating in Delaware in 1996. Amazon has strengthened its selling mechanism in its SEC Form 10K filing with the United States Securities and Exchange Commission (Amazon, 2018). The corporation is led by four ideologies: a customer-centric style instead of a competitor-focused approach, a craving for creativity, a commitment to operational distinction, and long-term performance. The firm serves its major client bases in each category, including consumers, merchants, developers, enterprises, and content providers. Additionally, the firm offers various services, including advertising and co-branded credit card agreements (Amazon, n.d.a). This diverse range of services benefits people, industrialists, small enterprises, artists, filmmakers, and large institutions every day. Amazon’s brands, including the Kindle and Amazon Echo Dot, encompass speech recognition and application development for audio and video services. AWS’s client base grew exponentially after its launch, as it now serves numerous companies, government agencies, learning institutions, start-ups, and developers.
Amazon employs nearly 570,000 full-time and temporary staff, resulting in quarterly and yearly revenue growth over the last three years. Additionally, the company’s development was aided by the 2017 acquisition of Whole Foods Markets. According to Amazon Inc’s 2017 financial report, the company earned $230 billion in the fiscal year 2018 and boosted revenues by 31 percent in one year. As of December 31, 2018, the stock was trading on NASDAQ under the ticker ‘AMZN’ for $874B a share. In 2016, the share’s lowest value was $475, and its uppermost price was over $870B (Amazon, n.d.a). Amazon’s primary competitors include Alibaba Group Services Limited, Apple Inc, and Wal-Mart Stores Inc.
The Importance of Cybersecurity
Any firm with an online presence must protect itself against cyber-attacks. In this rapidly changing era of technical advancements, exponential development, and unprecedented dangers, businesses should manage their threat exposure from cybersecurity risks and attacks. Amazon is unusual in that it must protect against cyber threats and give cybersecurity solutions to its consumers (Morgan, 2017). AWS offers a range of computing services to its diverse customer base. GuardDuty was launched by Amazon in 2017 and was soon embraced by international brands like Netflix, GE, and many more. It is a novel, dynamic, and intelligent method of recognizing risks and analyzing billions of events each day to discover new and developing hazards that organizations face. GE completed the installation of this system in less than 24 hours. AWS is attractive to giant corporations and small enterprises, as more than half of all cyberattacks target small organizations.
With Amazon’s increasing fame and usage, the firm should build systems and submissions to manage traffic securely. One of them is the secure sockets layer (SSL) that codes online communication, ensuring that only the site and the operator can read it (Amazon, 2018). This safeguards users from sniffers scanning their communications and eavesdropping on their activities. Although the information may be hacked, it is indecipherable to all parties save the handler and the website. DNSSEC protects websites from DNS assaults; however, Amazon does not use it due to the technology’s infancy. Amazon should not just be concerned about foreign threats but also internal attacks. Reduced attack risk ensures the company’s continuing development, employee satisfaction, and better cybersecurity.
Risks and Their Consequences
Amazon confronts several risk factors for cyber-security. They include ransomware, phishing, data leakage, hacking, and insider threat. Ransomware is a virus or harmful program that tries to encrypt a firm’s data and illegally obtains the unlocking code. In contrast, phishing refers to the attempt to get vital information by posing as reliable contacts such as a financial institution or an internet service provider. The availability and affordability of portable technological devices make data backup and mobility easy (Morgan, 2017). These characteristics also lead to companies such as Amazon becoming targets for data theft (data leakage). Hacking involves illegal access to Information Technology systems, which makes criminals access data from outside the organization. Since Amazon employs personnel (full-time or part-time), the management should be careful as employees can mistakenly or intentionally disclose private data (insider threat) to criminals.
Amazon should address a variety of other risk concerns. For example, fierce rivalry is a crucial risk element. Although this external danger may not be eliminated completely, Amazon’s plan has continually been to be aggressive in all that it does, whether selling items at a bargain or delivering cutting-edge cloud computing packages. While Amazon’s evolution and expansion have been rapid, the company’s managerial, operational, financial, and other divisions have been strained (Wilhelm, 2017). The firm must remain current with advancements and even keep commitments made. While addressing identified challenges, the management should conduct continuous SWOT and PESTEL analyses of the firm.
Amazon’s focus is not on the short-term gains but on the company’s long-term viability and sustainability. As an international business, Amazon is also exposed to currency risk (Amazon, 2018). Its overseas activities subject companies to various hazards, including adverse local, political, and economic situations, regional government instability, supplier failures, low-quality supplies, inventory shortages, and inconsistent guidelines and regulations (Consumer Reports, 2021). Additionally, geopolitical events such as wars and natural disasters that encompass tsunamis or storms should be considered. The arising conditions may either help Amazon or act as a hindrance to its continuing development. Amazon should manage all potential hazards peacefully to ensure continued success and survival in such a varied and multi-cultural worldwide context.
Conclusion
Amazon started from a low financial background when it inaugurated its operations as an online bookseller in 1994. The management of Amazon should make timely resolutions to recognized problems and mitigate possible risks to ensure that the corporation upholds its leading position in the online market. Amazon should tackle a diversity of risk concerns. The first risk component is fierce competition. While addressing established challenges, the management should conduct constant SWOT and PESTEL analyses of the firm.
Amazon’s concentration is not on the short-term benefits but on the corporation’s long-term viability and sustainability. Amazon should manage all possible hazards peacefully to ensure sustained success and survival in such a varied and multi-cultural international context.
References
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