NX0474 Strategic Management for Competitive Advantage Assignment Sample 2023
Introduction
Amazon.com is the world’s largest online store. In 2011, Amazon.com switched from tape hardening to using Amazon Simple Storage Service (Amazon S3) to sponsor most of its Oracle databases. This strategy reduces the complexity and cost of estimates, provides faster backups and restores, eliminates the need for tapes for backups and documentation, and leaves a competent team for higher-level activities.
Omnipotence is the first exclusive component of the amazon.com business site. This is an important event for both the client and the client. The report highlights a critical evaluation of the CSR and financial performance of Amazon over the past years.
Principles of CSR adopted by Amazon Inc
The significant principles of CSR or corporate social responsibility adopted by Amazon are mentioned below,
Reduction in carbon emissions
Amazon is focused to reduce its overall carbon emissions to zero for 50% of its total product shipments by 2020. Furthermore, the firm has also been reported to reduce its overall carbon emissions to zero by 2040 in development of a sustainable environment with more focus on electronic vehicles for deliveries (Researchmethodology.net, 2020).
Sustainable sourcing of raw materials
Amazon is hereby found to be an active member of the “Better Cotton Initiative” that restricts it from importing cotton from other countries and locally source it for reducing the cost and fuel consumption in the process.
Waste reduction and recycling
The firm was reported to eliminate over 665.000 tonnes of packaging materials for its shopping boxes worth 1.18 billion in the past years (Researchmethodology.net, 2020). Furthermore, the firm has also condemned the usage of single-use plastics which are a menace to the environment.
Support to local communities
Amazon has contributed over $25 million for the development of independent delivery personnel and stakeholders due to the negative financial impact of Coronavirus pandemic. Moreover, the “Device Donation Programme” was conducted by the firm for a donation of electronic devices and gift cards to schools for better scope at online education near Amazon Fulfilment center across the US.
Principles of organizational sustainability
This is the act of meeting the present needs irrespective of what happens Later on during the cause of business survival. (Sullivan, 2015). Organizational sustainability on its part employs three key pillars. The pillars are: –
- Environmental Pillar
- Social Pillar
- Governance Pillar
These pillars tend to remind us the correlation of the above pillars to the 3Ps, which we discussed in the above text. (Azevedo & Barros, 2017)
Source: (Sustainanalytics, 2021)
Environmental Pillar
The environmental risk score for the firm has emerged to be 5.1 showings significantly lower than the rest as it implemented strategies like reducing usage of single-use plastic products. Furthermore, transportation has also emerged to be significantly affecting the environment on behalf of the giant logistics company which is found to be replaced by 100,000 electric vans through a reduction in carbon footprints (Amazon, 2021).
Social Pillar
Amazon has also incorporated social corporate responsibilities for stakeholders who in turn influence the perceptions of consumers towards services and goods produced. Some significant social responsibilities maintained by Amazon are developmental support for its employees via education and healthcare along with conservation of environments.
Governance Pillar
Amazon was also found to focus more on customers and levels of cash within the firm to mitigate its debts. Furthermore, the firm ascertained stressing in long-term leadership than short-term profitability to gain strategic advantage over its competitors (Aboutamazon, 2021).
However, the risk score for governance is high with 9.6 which has strived the company to include cost-conscious culture for its varied ethnicity of employees and maintain a long-term valuation for its shareholders.
Corporate Governance mechanisms
Corporate Directors are held responsible to investigate and come up with decisions that outweigh options availed to the market by other companies. This enables Shareholders to understand and appreciate the fundamental process where corporate success sprouts from. Major Objectives: Customer-Oriented
The management is critical in the employment of bold and sound investment decisions that are bound to propel the corporate economic agenda into the future. As the company is interested in the long-time market dominance, Long term decisions are crucial for the holding of the customers onto the services provided. Profits are automatic once a sound customer base is assured.
Profitability
The board of directors focuses on improving the turnover for the company through a projection of increased cash flows. Wise spending decisions while maintaining an ethical culture of considering the crucial impact of a cost-aware culture.
Human Resource
Focusing on hiring talented employees who are renumerated well is an advantage. In addition to that, Sharing the corporate vision with the Human Resource will propel the achievement of the company’s objectives. In principle, the board and all its employees follow a code of conduct that is outlined in the company to govern all the operations.
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Source: Amazon.Com/about amazon
CSR strategies underpinning Amazon’s sustainability agenda
Amazon.com Inc. on its part of the bargain maintains a special department devoted to ensuring that its existence extends to the society over which its customers originate. Being a current trend in almost all businesses, it seeks to identify itself with a contribution towards the development of societal wellbeing.
As the company is made up of various stakeholders, each with their group demands, we shall therefore see the impact of the same on them. In principle, the board and all its employees follow a code of conduct that is clearly outlined in the company to govern all the operations.
Customers.
Amazon considers its consumers or simply put customers as the key determinant of its e-commerce corporate success. This is because, without the real consumers of the available commodities, there would be low revenues generated. This necessitates the treatment of customers with great priority.
Employees.
Amazon, as a company, respects employees regarding their contributory role in organizational performance. Most employees demand competitive pay and career growth. The company’s human resources department is responsible for the generation and development of new ideas that are bound to increase corporate returns.
Community.
Amazon has dedicated a program for its neighboring people significant due to their influence on the consumer Purchasing power of the company’s products. Most commonly, the common people need support, through education, environmental conservation, and healthcare.
Amazon’s financial performance
The financial performance of Amazon has been hereby analysed through various analysis of ratios in terms of profitability, liquidity, efficiency, and turnover.
Source: Finance.Yahoo, (2021)
The above figure shows the gross profit ratio of the firm to increase in 2019 to 26.65% then 25.64% in 2018. Furthermore, due to the negative impacts of the Covid-19 pandemic, the GP ratio was found to decline to 24.41% in 2020. However, the company has maintained it over the industrial standard depicting a positive investment approach in the future.
The operating profit margin ratio was found to decline from 5.33% to 5.18% from 2018 to 2019 (Finance.Yahoo, 2021). However, the OP margin ratio recovered to 5.93% in 2020 highlighting its increase in operations and overall net sales due to the rise in e-commerce sales for the pandemic situation.
Source: Finance.Yahoo, (2021)
Liquidity ratios help ascertain a firm’s ability to mitigate its short-term liabilities through its assets or cash held within them (Le & Gregoriou, 2020). The current ratio of the firm has been above 1 which shows financial stability within the firm, although it reduced to 1.05 in 2020 from 1.10 in 2019.
On the contrary, the cash ratio has been found to significantly decrease from 0.46 in 2018 to 0.41 in 2019 which further reduced to 0.33 in 2020, showing an overall increase in the firm’s liabilities that has reduced its capabilities to mitigate via cash held (Finance.Yahoo, 2021). Thus, the firm is required to increase its cash holdings for further effective mitigation of short-term liabilities.
Source: Finance.Yahoo, (2021)
The above figure highlights efficiency ratios of inventory to sales that are below the industry standard and shows a steady decline in the ratios. The significant decline in the concerned ratio suggests the firm’s inability to maintain its inventory levels with the increase in net sales.
Fixed assets turnover was also found to decline from 2.43 in 2018 to 1.94 in 2019 which further reduced to 1.83 in 2020 (Finance.Yahoo, 2021). Therefore, Amazon has failed to increase its net sales from the assets held within the firm and has reduced below the industry standard.
Source: Finance.Yahoo, (2021)
A decline in the debt-to-assets ratio from 0.14 in 2018 to 0.1 in 2019-2020 suggests a sufficient amount of assets held within the firm to repay its current debts and obligations. Furthermore, the debt-to-equity ratio for the firm has also declined steadily showing lower risks as the firm is not using its shareholder’s equities to finance its operations. Therefore, it is a positive aspect for its future investors.
Source: Finance.Yahoo, (2021)
The above figure depicts an increasing inventory turnover ratio from 12.39 to 15.49 in 2018-2019 which has slightly declined to 14.92 in 2020. Moreover, the concerned ratio being high shows the company’s ability to sell its products quickly in the past two years. However, the firm has failed to capitalize from the assets held within the firm as the “total assets turnover ratio” declined from 1.58 to 1.45 and further to 1.41 over the concurrent years.
Conclusion
It can be seen that the Net sales product is realized through a coordinated marketing approach. Increased engagement in CSR advocacy, especially in mitigating Humanitarian crimes in Iran, and support of Syrian Human Rights has attracted more customers (Appended).
The financial performance showed significant strong returns for the company’s stakeholders encouraging them to run a more sustainable business to benefit each of its shareholders. However, the cash or assets were found to be underutilized by the firm which can be further improved in concurrent years.
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