This paper will examine the corporate success of Amazon.com, Inc. in times of the dot-com bubble compared to its performance in times of the corona-crisis. The comparison of the company during these financial crises will include corporate strategy, the company’s liquidity, revenue and profit. It will also analyse stock prices and the performance on the stock market, as well as the number of employees and their compensation as indicators for its financial situation and the company’s success.
Looking at the global economy, it is clear to see that financial crises are occurring from time to time, challenging companies in many ways to innovate and find solutions and get through financially instable times with minimal losses. There are also different types of crises which are weakening especially certain economic sectors.
The internet-crisis and the corona-crisis both had an immense impact on the financial market and the business world. Considering these two crises which are very different, or almost contradictory to each other, it seems to be interesting to compare the performance of an internet company, which began as one of these dot-com startups during the internet crisis, but is still innovative and successful to this day, even during the corona crisis.
Table of Contents
1 Introduction
2 Description and timeline of Amazon.com, Inc.
3 Comparison of Amazon’s performance during both crises
3.1 Amazon’s performance during the dot com era
3.1.1 Corporate strategy
3.1.2 Liquidity, revenue and profit
3.1.3 AMZN Stock
3.1.4 Employees and employee compensation
3.2 Amazon’s performance during the corona crisis
3.2.1 Corporate strategy
3.2.2 Liquidity, revenue and profit
3.2.3 AMZN Stock
3.2.4 Employees and employee compensation
4 Conclusion
Objectives and Topics
This paper examines the corporate success of Amazon.com, Inc. by comparing its performance during two distinct financial crises: the dot com bubble of the late 1990s/early 2000s and the 2020 Covid-19 pandemic. The research aims to analyze how the company's strategies, financial metrics, and operational handling differ or align across these two periods.
- Corporate strategy and long-term expansion goals
- Liquidity management via the cash conversion cycle
- Revenue growth and profit development
- Stock market performance and volatility
- Employment strategies and employee compensation models
Excerpt from the Book
3.1.1 Corporate strategy
In a letter to his shareholders from 1997, Jeff Bezos stated the plans he had with his company Amazon.com. It reads that the goal at that time was to strengthen the market position Amazon had at that moment, whilst extending the company’s operations into other markets in order to build a strong and long-lasting brand, even in well-known and traditional economic markets. This process would be cost-intensive, making shareholder value an essential factor for the company’s growth. Investments would be based on the goal of creating long-term market leadership instead of increasing short-term profits. In order to reach that goal, rather risky and aggressive investment decisions were planned for the future. Cash-flow-maximization and cost-reduction are principles that must be maintained to improve the chances of profitability in the long-term. Especially in these early years of Amazon.com, as the business had to deal with net losses. But in the beginning phase, scaling the company would always be the highest priority even if it disrupted the principles mentioned above. The key principle that the company Amazon.com is based on is customer obsession. The purpose of Bezos’ company is to provide the best customer service in the e-commerce market. This is done by constantly improving the website for the comfort of the customer with for example 1-click shopping, recommendation features and other functions, besides from decreasing prices for the products that are listed on the website. The delivery time should be improved by opening new distribution centers in different locations, so that the products can be stored closer to the customers. An increase in the number of stored items should improve the availability of products [Amab][CNB99] (Amazon.com, Inc., 1998b; CNBC, 1999). To gain new customers, new products of different categories have been added from time to time to the website. More important than gaining new customers is building customer loyalty and increasing the number of repeat purchases [Zan] (Zana Majed Sadq et al., 2018).
Summary of Chapters
1 Introduction: Provides an overview of the global economic context, defining the dot com bubble and the corona crisis as the focal points of the study.
2 Description and timeline of Amazon.com, Inc.: Traces the company's founding and early development from an online bookstore to an expansive e-commerce platform.
3 Comparison of Amazon’s performance during both crises: Detailed analysis of the company's strategy, finances, stock, and personnel during the internet crisis and the pandemic.
4 Conclusion: Synthesizes the findings, highlighting Amazon's resilience and its focus on customer obsession as the core drivers of its long-term success.
Keywords
Amazon.com, dot com bubble, corona crisis, financial performance, e-commerce, cash conversion cycle, stock market, market capitalization, corporate strategy, customer obsession, revenue growth, employee compensation, liquidity, pandemic, resilience
Frequently Asked Questions
What is the core focus of this research paper?
The paper evaluates and compares the performance and success of Amazon.com, Inc. during two vastly different economic crises: the internet crisis (dot com bubble) and the 2020 Covid-19 pandemic.
What are the central thematic fields covered in this study?
The study focuses on corporate strategy, financial indicators (liquidity, revenue, profit), stock market behavior, and human resource management (hiring and compensation).
What is the primary research goal?
The goal is to determine how Amazon managed its operations and maintained growth during these critical periods and whether its foundational principles remained effective throughout both crises.
Which scientific methodology is applied here?
The author uses a comparative analysis of corporate data, financial reports, and historical company developments to contrast performance metrics across the two selected time periods.
What aspects of the business are examined in the main body?
The analysis covers the evolution of corporate strategy, cash-flow management techniques, revenue trends, stock volatility, and changes in the workforce and compensation packages.
Which keywords best describe this work?
Key terms include Amazon.com, dot com bubble, corona crisis, cash conversion cycle, and customer obsession.
How did Amazon's cash conversion cycle influence its survival during the dot com bubble?
The company optimized the cash conversion cycle to ensure permanent liquidity, allowing it to finance expansions without the immediate need for raising additional capital during the burst of the dot com bubble.
How does Amazon's approach to employee compensation change in response to stock price volatility?
Amazon typically adjusts compensation by balancing cash payments and stock-based awards, prioritizing cash when stock price volatility is high to ensure employee retention and satisfaction.
- Quote paper
- Jagnoor Bhalla (Author), 2020, Performance of Amazon during the Corona-Crisis and Dot-com Bubble. Corporate Strategy, Liquidity, Revenue and Profit, Munich, GRIN Verlag, https://www.grin.com/document/1000556
