This assignment is written to do alternative growth strategies adopted by Amazon in global arena in last five years through thorough analysis of various investments made by it. It will help student to understand investment analysis so as to get finance assignment help for their projects.
2.0 Alternative Growth Strategy
No doubt the corporate strategy such as marketing strategy of Amazon is very strong as it is concerned with internal and external environment along with basic competencies of the shareholders. But the real growth comes through the inorganic routes which are as follows
2.1 Merger with Potential Affiliates
In last five years Amazon merge many medium entities so as to improve its business environment across the globe. For Ex:- Currently in India it is planning to acquire DTDC so as to gain advantages in logistics and distribution part from its potential competitors Flip kart in India. The merger serves the following purposes in last five years for Amazon :-
- It provides operational synergies to its business priorities as we seen in the case of recent merger with DTDC in India.
- It helps in the improvement of operational efficiencies in last five years propelling top line and bottom-line.
- It also helps in providing already acquired market for quick growth in some cases.
2.2 Acquisition Strategy
In last five years Amazon merge many small entities such as Zappos , Audible etc. to fulfil its business environment across the globe. The acquisitions help in quick gaining of technical expertise as well as propel revenue and cash flow growth in quicker way. Beside these it also provides operational synergies to its business priorities so as to improve its operational profits.
2.3 Importance to Cash flow through efficient Working Capital Management
This section is written for students looking to get insights for getting corporate finance assignment help. The working capital management is the biggest challenge for any company. Working Capital is the difference between the Current Assets and Current Liabilities of the Firm, enterprise or any other concern. It is very important for the business because it determines and liquidity of the firm and also represents the goodwill and credibility of the firm. Working Capital for any company is more important because they need strong working capital to run the business. Working Capital can be of two types .If Current Assets is more than Current Liabilities, it indicates that the Company is having Strong working Capital and they have the ability to meet its day to day operations activities of the business.
But if Current Asset is less than Current Liability it indicates a weak working Capital and company is not able to meet the operating activities of business. In this acquisition spree too working Capital plays a very important role because Target Company should have strong working capital so that they can meet the sudden demand in the market. They need to have very strong working capital because it will not only help them to have good regular business operation but also strong reputation in the Market through which they might get other Clients in the business.
Let’s understand the importance of working capital with the help of cash; It is the most liquid form of working Capital. A company having good cash in hand is able to have great opportunities. The company requires cash balance as it will protect them from uncertain situations. But on the other hand it should not be kept idle as it will erode its value through time value concepts. Hence, management of cash is also extremely important for performance of a company. Similarly, right balance of trade balance is also important. Trade receivables are one of the most important source of working capital management .Often most of the companies in manufacturing field suffer one permanent problem i.e. bad debts. This can be analysed with the help of efficiency ratios. Hence, it plays an important criterion in selecting the target company for Amazon which it uses extensively to fuel its growth.
3.0 Investment Analysis
The investment of recent merger and acquisitions plays a great role in increasing its revenue by 22% in 2014 compare to last year. This is clear from the operating cash flow to sales ratio as it shows a huge increment by 12.35% in 2014. This ratio, which is expressed as a percentage, compares a company’s operating cash flow to its net sales or revenues, which gives investors an idea of the company’s ability to turn sales into cash. It would be worrisome to see a company’s sales grow without a parallel growth in operating cash flow. Positive and negative changes in a company’s terms of sale and/or the collection experience of its accounts receivable will show up in this indicator. It is in increasing trend due to improvement in the operations of the company from major merger and acquisition such as Audible, Zappo etc. in last few years. It increases from 9.30% to 10.53% showing the improvement in its operation compare to FMM. Besides these the other ratios such as ROE, Gross margin, ROA are also is in increasing trend due to adoption of inorganic routes by Amazon. The equity investments produce good results for Amazon and its bad effect is very limited due to enhancement in value of its target in most cases.
4.0 European Market Analysis
Europe plays an important role in the growth of Amazon in recent years. It offers huge opportunities to propel growth for Amazon. The revenue growth alone in Europe is around 27% much higher than company’s overall growth rate. It is clear that there lie great opportunities in the in the Europe. Besides these they can also tap market by launching innovative products as per the local tastes and preferences. The Amazon is facing huge expectations and pressure from the customer to supply innovative freight service at Europe. Hence, opportunities lie to adopt a social responsibility to make its supply chain innovative to serve the needs of the customers and improve its business in further way.
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