Abstract

In this report, we have compared and contrasted the business models, performance of the management teams, accounting methods, profitability analysis, other ratios analysis and discuss other influential factors outside of the market for Walmart and Amazon Inc. Walmart and Amazon have both helped to reshape the retail industry of the world. Today, Amazon is the most dominant online retailer and Walmart has topped the Fortune Global 500 with regard to the largest corporations of the world in terms of total revenues. The company has revenues of around $ 500 million. If we look at the growth of both the companies, then Amazon Inc. is growing more rapidly within the retail market. Analysts have forecasted that over the period of the next five years, the earning per share of Amazon Inc. would grow by more than 50%. In this report, we examined the past and current performance of both the companies and we examine how these companies have been securing their assets for attracting the investors. The evaluation of business models, management teams, competitive advantages and financial statement analysis reveals that investors should invest in Amazon Inc. over the long term.

Description of Amazon and Walmart Business Models, Customers and Competitive Advantages

First of all, if we talk about the business model of Amazon Inc. then we see that Amazon operates with a range of different moving parts. Firstly, all the products of the company are sold directly and the company sells them through its online website where the customers believe that they can acquire less expensive products that are readily available for them. Along with selling the products directly, the company provides a platform for all the other retailers for selling products to the buyers. In this way, Amazon avoids the slow moving inventory and the huge holding cost of the inventory(Fool, 2017).

Finally, Amazon has maintained a subscription based model through small electronics product line and the provision of the Amazon Prime Services. Amazon Inc. has more than 60,000 different types of customers that are making use of the Amazon Web Services and most of these customers are not at all associated with the on demand computing(Simons, 2010). Most common customers of Amazon include the pharmaceutical companies, divisions of the bank and many other larger firms that try AWS for a temporary project(Schonfeld, 2008). The competitive advantage of Amazon is built on the basis of the powerful value proposition where the company provides its customers with a wide range of goods to select, with ultra convenient shopping experience and low prices.

On the other hand, the corporate strategy for Walmart revolves around the retail business model of the company. The company has adopted the low cost leadership strategy in order to lower its prices to provide value for money products to its customers. The behavior of the company in the global retail market is related to the marketing mix of the company. As the company is the biggest retailer around the world, therefore, it uses the strategic leadership and the same marketing mix when it expands its operations globally (Kiesewette, 2013).

In terms of the marketing mix, the core products of the company are the services provided to its customers. This is the area, which is causing the issue for the company currently. The company uses the Everyday Low Price pricing strategy to attract large population of the customers. The promotional mix of the company comprises of personal selling, sales, promotion, advertisements and public relations. It usually communicates through its websites and newspapers (Zook & Graham, 2014).

Finally, the company makes use of the intensive distribution strategy to provide the same customer service level and products to its customers. The competitive advantage of the company is based on a range of core competencies such as company has maintained low cost operations due to which the company is able to offer low prices to its customers and it has a strong supply chain. The company and its management have played an important role in the establishment of the universal bar code (Walmart, "Our History", 2016).

Evaluation of Amazon and Walmart’s Management Teams

The management of Amazon ensures that these values are applicable for all the stakeholders on equal grounds and values such as customer obsession, ownership, earn trust of others and deliver results, these are specifically prioritized towards the customers of the company (Satterfield, 2014). The critical performance variables tracked by the company are based on the four perspectives of the balanced scorecard. For example, management measures consumer performance through social media analytics, web analytics, and brand awareness(MM&M, 2016). The financial, developer and human capital perspectives are measured through SKD sales, number of available apps and talent acquisition and retention.

Then the strategic boundaries in terms of the corporate strategy of the company restrict the inconvenience of the buyers that can cause the strategy of the company to fail. Based on the fifth question of stress test, management at Amazon generates creative tension by linking performance with rewards and bonuses(Robischon, 2017). Performance appraisal is key part of organizational objectives. On number six, the employees of Amazon are highly committed as they follow the standard operating procedures of the organization(Schonfeld, 2008).

Cross unit teams and matrix accountability has been created so that the employees can be assigned to a second box and employees are empowered to make decisions and tell their new ideas for new innovations. Finally, there are a number of uncertainties that management takes into account to make important assumptions. For example, Amazon forecasts the future price changes in the market and it sets the prices of its products based on the estimated demand of its products(Simons, 2010). The organization chart of Amazon is shown below:

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