Amazon

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Would Amazon.com achieve its aggressive goal of becoming cash flow positive by the end of 2001?
Despite an increasing customer-base, recognizable brand, and innovative business model concept, Amazon.com found itself unable to achieve profitability. Faced with the threat of bankruptcy, Amazon.com founder and CEO Jeff Bezos was convinced his e-retailing company would turn a profit by the end of 2001. Understanding the challenges ahead, Bezos’s aggressive leadership positioned the company for future success based on several key factors including: the company’s upward trend in net sales, strategic business partnerships, and IT-based proprietary assets.
From 1997 to 2000, Amazon experienced positive growth in net sales, making this upward trend likely to continue on into 2001. While operating expenses in fulfillment, marketing and technology also increased, these expenses were necessary to solidify Amazon’s opportunity for future growth and profitability. In 1998 and 1999, Amazon “spent over $429M to build a state-of-the-art digital business infrastructure and operations that linked nine distribution centers and six customer service centers located across the United States, Europe, and Asia” (Applegate, 2009, para. 1). This strategic expense in technology and restructuring suggests that future operating costs would likely level-off and the company would eventually cross over to begin making a profit.
In 2000, Amazon announced its partnership with Toys “R” Us, Inc. This strategic partnership enabled Amazon to use its retailing technology to build and host the Toys “R” Us online store alongside its state-of-the-art digital distribution and customer service centers it purchased in 1998-1999 (Applegate, 2009, para. 1). This partnershi...

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...s infrastructure the company could create and sustain value overtime.

Works Cited

Applegate, L., Austin, R. and Soule, D. (2009). Corporate information strategy and management: Text and cases. 8th ed. Boston: McGraw Hill, 2009.
Can Amazon Make It? (2000, July). Retrieved from Bloomburg Businessweek: http://www.businessweek.com/printer/articles/75604-can-amazon-make-it?type=old_article Retrieved online: March 5, 2014.
Lambeth, J. (2002, January 23). Amazon turns a page with first ever profit. Retrieved from The Telegraph: http://www.telegraph.co.uk/education/3293111/Amazon-turns-a-page-with-first-ever-profit.html Retrieved online: March 5, 2014.
Lashinsky, A. (2012, November 16). Amazon's Jeff Bezos: The ultimate disrupter. Retrieved from Fortune & Money: CNN Money: http://management.fortune.cnn.com/2012/11/16/jeff-bezos-amazon/ Retrieved online: March 5, 2014.

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