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STRATEGIC MANAGEMENT 4199 Midterm Q 2

STRATEGIC MANAGEMENT 4199 Midterm Q 2 - NAME Juan Torres...

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NAME : Juan Torres MGT 4199 Midterm 2. Based on information presented in the case : How is Amazon doing? o Even though Amazon has been increasing its revenues year on year, the company has not been able to improve its profitability. However, despite this fact, Amazon has a really high market share due to its product assortment, partnerships and customer satisfaction which places the company as the leader in the online retailing industry. In my opinion Amazon is not doing well. Amazon is certainty achieving the goals Bezos stated for the company long-term plan. Amazon has a high market share that will lead the company to increase sales, achieve higher profit margins, as well as increase the shareholders’ value. However, Amazon doesn’t have good profitability ratios and its potential growth in the industry is very uncertain although it is the leader and has the higher market share. What financial and other ratios are important? Why? o Market Share: it is the percentage of an industry or market's total sales that is earned by a particular company over a specified time period. It is the most important ratio for Amazon (in my opinion) because it is Jeff Bezos’ core business strategy is to have a rally high market share. o Net Profit Margin: it measures how much out of every dollar of sales a company actually keeps in earnings. It is useful to compare companies’ performance in similar industries. It is important for
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