Final Project II Risk Management and Ethical Analysis FIN-330 SNHU
Amazon is leading the way in the e-commerce world. They have been in business for over two decades and started as an online bookstore. They are an online retailer that offers many products such as books, music, electronics, and household goods. There are not many things that one could not obtain from shopping on the Amazon website. While some businesses suffered from the global pandemic of Covid-19, Amazon soared to new heights by allowing people to still get their everyday needs delivered right to their door without leaving the safety of their homes. This also comes with plenty of risks and challenges as to deliver to their customers, they needed to stay open and have employees willing to be essential and continue to work during the pandemic. Financial reports showed that Amazon had a 21.7% growth in total revenues for the 2021 year over 2020. As of 2021, Amazon employed approximately 1.6 million employees around the world. One large challenge that the financial managers of Amazon can face is maintaining their cash flows. For short term planning Amazon has large amounts of money coming in and out daily. They can attempt to project what revenues they create each day, but there are no guarantees. They need to be able to advise the company how to maximize their profits. Working capital management is very important to the financial health of any business. Making sure their financial managers are ensuring that there is enough cash flow to cover their liabilities as well as how quickly their assets can be turned into cash flow are important factors. Amazon also has a high turnover in the inventory that they have in their facilities. Finance managers need to keep this in mind so that the costs that are associated with manufacturing and distribution are properly handled. Amazon can handle the economic risks that happen, and they proved this during the recent pandemic. When the pandemic hit, Amazon continued its operations as an essential business.
Many people were in their homes and not going out, but still needed household essentials. They were able to shop at Amazon and have the products safely delivered directly to their doors. This was a great example of what this company can accomplish and its value to not only its investors but its customers. At a time where many businesses were forced to close their doors, Amazon was able to expand and assist more people. One potential risk that Amazon may face is that people were spending less. There were also people that were reverting to cash only spending to maximize their financial awareness. Amazon was quick to update their operations to accommodate these changes. Prime Days is an event that Amazon does to promote sales on many items, and they even incorporated different ways to pay for your purchase like Venmo, so that the money was coming directly from a bank account instead of needing to utilize a credit card. Political risks that could be worrisome for the financial managers of this company would be if laws and regulations change in the individual markets or federally. It is imperative that they have proper legal teams staying on top of these things to ensure that they are always in compliance with all guidelines that they must be following to avoid any unnecessary fines. Protecting their consumers' private information is another avenue that they need to ensure top- notch security measures for. Amazon is not alone in its ecommerce platform, there are other leading companies like Walmart and Target that are highly competitive for this retailer. Walmart and Target both have the advantage of having brick and mortar locations around the world. Where Amazon does have some stores in the United States, they do not carry everything that the online resource has to offer. The financial managers can make sure that there are proper budgets in place for advertising to draw in consumers to its website. One risk that they can face is for the people that do not want to shop online, and those that are not tech savvy. Then there are those that need an item