Ecem Akyildiz, Samuel Lee, Izzy Ouellette, Dillon Scott

Agenda

● History

● SWOT Analysis

● PEST Analysis

● 2 Solutions

● Conclusion

“ Amazon has the unique ability to launch and run entirely

new types of businesses while simultaneously extracting

value from existing businesses. Amazon’s journey forward

will likely be marked by a series of transformations, as it

continues to pursue its vision unafraid of white space,

business model innovation, or renewal.”

HISTORY 1979 -

1995 -

1999 -

2005 -

2013 -

Amazon Acquisitions and Investments

SWOT Analysis for Amazon

Problems

●●

Competition

Google self-driving car (develop technology, not sell car)

Caterpillar develop autonomous vehicles for mining

UPS “UPS invests more in technology than any other company in the delivery business, and we’re always planning for the future”

FedEx creating aircraft to carry cargo

Milestones in U.S. State AV Regulation

Solution - Drones● 5 year plan to increase operating profit● Continue lobbying at current prices for drone legalization● Use Nevada and Florida as models● Break-even point from lobbying reached between 2016 and 2017

PEST Drone AnalysisPolitical - Need more U.S. State AV Regulation (currently only Nevada, Florida, & Michigan allow AVs)

Economic - Requires heavy investment in Lobbying for AV Regulation ($3.4 billion)

- Increase in R&D expenses ($1.73 billion)

- Increase in Marketing expense

Social - Consumers are wary of this new technology

- Loss of jobs

Technological -Still developing new technology, nothing like this has been done before

Pros● Cost savings compared to other

methods● Quicker delivery times● Less reliance on other companies

for deliveries ● Expected increase in sales

Cons● Won’t be fully accepted for years● Limited range● Costly lobbying● Increase in marketing costs

Implementation Strategy

1. Maintain constant lobbying efforts2. Use the two states which already

legalized drones as model and test platform

3. Perfect marketing within these states4. As more states legalize drones,

produce more drones to go along with demand

Challenges● Competition delivery companies using drones at a cheaper cost

● Developing improved drones to travel further and hold more weight

● Animals as well as other destructive obstacles

● Future laws further regulating drones

Fees for Deliveries

Drone Revenues and Expenses Forecasts

Years 2014 2015 2016 2017 2018

Drone Revenue $3,192,320 $17,557,760 $28,730,880 $39,904,000 $52,673,280

Expenses $1,461,685 $8,039,267 $13,155,165 $18,271,062 $24,117,802

Lobbying Expenses $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

Drone Income $730,635 $8,518,493 $14,575,715 $20,632,938 $27,555,478

Total 5 Year Earnings before Tax $72,013,258

Advertising Year 1 Year 2 Year 3 Year 4 Year 5

Internet advertising campaign #1 $1,250,000 $1,000,000 $600,000 $600,000 $300,000

Outdoor advertising campaign #1 $550,000 $375,000 250,000 $250,000 $0

Tv advertising campaign #1 $750,000 $600,000 $500,000 $500,000 $500,000

Newspaper advertising campaign #1 $50,000 $50,000 $0 $10,000 $10,000

Internet advertising campaign #2 $1,250,000 $1,000,000 $600,000 $600,000 $300,000

Outdoor advertising campaign #2 $550,000 $275,000 $150,000 $150,000 $0

Tv advertising campaign #2 $750,000 $600,000 $500,000 $500,000 $500,000

Newspaper advertising campaign #2 $50,000 $25,000 $0 $10,000 $10,000

PR activities $350,000 $150,000 $150,000 $150,000 $150,000

Total $5,550,000 $4,075,000 $2,750,000 $2,770,000 $1,770,000

Solution - Amazon Web Services(AWS)● IT Infrastructure Service-Cloud Computing● Pay as you go model● Offers Broad Functionality on a Global Scale● Reliable Data Management● Emphasis on developers

Pros● Large Industry Growth● Expand Customer Base● Available Capital● Long term profitability is high ● market leader ● Usage of amazon’s existing data

centers

Cons● Untested market● Require large investment in fixed

capital asset● Short term profitability is low due

to large capital investments

Current Infrastructure of AWS

Data Centers

Expand Data Centers to Increase Data storage and throughput

Necessary to keep up with increasing demand

Implementation StrategyYear 1 Create a basic version of AWS and offer as freeware

Develop and implement the new infrastructure for AWSStart expanding Data centers

Year 2 Based on demand, invest in expanding data centers

Year 3 Continue to expand data centersRefine platform offering based on user feedback

Year 4 Continue the expansion of data centers based on demandIf the expansion of AWS is not profitable, consider liquidating data centers to an IT-competitor such as azure

Year 5 Depending on the increasing demand of AWS, continue the expansion of data centers

Challenges

● Strong competition in PaaS offerings● Risk losing large investments in Fixed Capital Assets should demand

not be as expected● Risk of losing customers with basic needs to the free package of AWS

Projection for AWS

AWS Expansion 2013 2014 2015 2016 2017 2018

Rev from AWS $3,108,000,000 $3,418,800,000 $3,760,680,000 $4,136,748,000 $4,550,422,800 $5,005,465,080

Operating expenses $2,435,000,000 $2,735,040,000 $3,008,544,000 $3,309,398,400 $3,640,338,240 $4,004,372,064

Expansion of Data centers $0 $100,000,000 $100,000,000 $100,000,000 $100,000,000 $100,000,000

Earnings Before Income Tax $673,000,000 $583,760,000 $652,136,000 $727,349,600 $810,084,560 $901,093,016

Projected Income StatementYears Current 2014 2015 2016 2017 2018

Sales Revenue

AWS Revenue

Operations Expense

Operations Profit

Other Income

Interest Expense

Taxes

Long Term Debt Expense

Net Income

Any Questions?

Appendix I

Number of total packages shipped 232,000,000

86% of items under 5 pounds 199,520,00020% of customers within 10 mile radius 39,904,000

2 trips per package 79,808,000

Number of drones needed 9,138

5 year cost per drone $4,000

Cost of total drones needed 36,550,492

Trips for drones Per Year 79,808,000

Deliveries per drone per year 8,736

Number of drones needed 9,138

Costs Per Drone Number of Drones

Appendix II

Appendix III

With Drones Cost of Drones

Total Products Sold 232,000,000 232,000,000

# Packages 199,520,000 199,520,000

86% of items sold (under 5lbs) 20% 20%

% Live within a 10 mile radius of city center 39,904,000 39,904,000

Target Population’s cost $2.00 $0.18

Revenue / Cost of Delivery $79,808,000 $7,182,720

Total Revenue $72,625,280

Appendix IV

Ratios 2013 2014 2015 2016 2017 2018

Fixed Asset Turnover Ratio 679.99% 704.71% 704.15% 709.92% 722.09% 744.72%

Gross profit Margin 0.37% 0.74% 0.85% 1.48% 2.24% 3.62%