Iqbal Ahmed 15174
Centre Number: 10500
Unit 1 – Exploring Business (Assignment 1)
Explaining the features of two contrasting companies
The two companies I will be comparing is Amazon, which is my profit organisation and Islamic Relief, which is my
non-profit organisation.
Amazon
Amazon is a trusted worldwide company that sells goods and services which first operated in Seattle, Washington. It
is a very large company, having many employees as well as stores around the world. Jeff Bezos, the owner and
founder of Amazon, first started the company in a small garage where he displayed as an online bookstore. His
parents “invested $250,000 into the start-up of the company” 1. As of 2020, Amazon sells a range of
products/services such as clothing, computers, beauty and many more. From the very beginning, Bezos wanted to
make his company an “everything store”, which to this day we can say he has done successfully.
However, after reaching his goal, Bezos’ new purpose with Amazon is to become the number 1 technology company
to go to. Amazon use many retail strategies in order to do this. For example, they heavily focus into customer
service, being customer obsessed. This is a very clever tactic as it will help Amazon get closer to their customers,
meaning they will trust Amazon more, allowing a potential increase in sales. This is perfect for the long term as
customers will tell their friends and families positive things about the company which will improve the brands image
overall as well as allow Amazon to gain recognition. Amazon is rapidly growing as “Amazon’s net income in 2019 was
$11.59 billion compared to their previous years’ net income, $10 billion” 2.
Ownership type
Amazon Inc is a C Corporation which has many successful, wealthy shareholders like Andrew Jassy and Jeffrey
Blackburn. When it states “Inc” after the company’s name, it indicates the business is incorporated, meaning that it
“has formally identified itself as a business under the laws of at least one state.” 3 Also, the fact that Amazon is a C
Corporation, it means that the owner and the business is presented as two different entities so when the
corporation is taxed, it will be separate from the owner and the government cannot try and tax the owner’s personal
wealth.
Although Amazon is displayed as a C Corporation, some of their affiliates (Audible, Amazon LLC, IMDb etc) are a
Limited Liability Company (LLC). Amazon LLC is the “child” of their “parent” Amazon Inc, which runs their website.
The fact that it’s an LLC, it means that the members of Amazon is limited. For example, shareholders liability is for
the amount that hasn’t been paid on their share. So, if the company did somehow manage to go downhill, a
shareholder’s loss is only their value of the shares they’ve owned. Another reason why some of Amazon’s affiliates
are LLC is to reduce their tax, which is why they have business’ names like Amazon.com LLC (a Delaware company),
Amazon, Inc. (a Nevada corporation), Amazon Services LLC (a Nevada company), A2Z Gift Certificates, Inc. (an Idaho
corporation)”.4
There are many advantages to becoming an incorporated business such as providing more important tax and legal
power. For example, once you incorporate your business, you can protect your personal assets as creditors will not
be allowed to come for your personal assets, only your business assets. This is important as owners can manage their
business without the risk of their own assets (cars, houses, money etc). Another advantage to incorporating your
business is to have easier access to capital (financial assets for businesses). For example, an easy way for an
incorporated business to grow and enhance is to raise capital and request a bank loan, as they can provide shares of
stock. Majority of the time, banks tend to lend loans to incorporated than unincorporated businesses as
corporations normally have more access to different sources of money and needs which they can pay off their debts
through.
However, there are also some disadvantages to becoming incorporated such as having to do a lot of paperwork,
making it very time-consuming. This is a downside as “many business owners find incorporating quite work intensive.
1
https://www.cnbc.com/2018/08/02/how-jeff-bezos-got-his-parents-to-invest-in-amazon--turning-them-into.html
2
https://www.statista.com/statistics/266288/annual-et-income-of-amazoncom
3
https://www.legalzoom.com/articles/what-does-inc-mean
4
https://www.quora.com/Why-is-Amazon-com-an-LLC-1
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, Iqbal Ahmed 15174
Centre Number: 10500
Unit 1 – Exploring Business (Assignment 1)
There are a large number of forms, paperwork, and research needed to incorporate.” 5 Also, another downfall to an
incorporated business is that if your business fails, there is a bigger loss impact. For example, the owner and
shareholder(s) will have a risk of losing money through reduction/removal of stock values. This will result to
employees losing their jobs.
Size and Scope
Amazon is a very large brand as it is known globally and being known as the “largest internet company by revenue,
$280.5 billion, in the world in 2019.”6 “It is a multi-national company operating in 13 countries, some of which are
US, Germany, UK, Japan and more, though they mainly function in the US as most of their customers are based
there, having 193.6 billion in net sales.” 7As of July 2020, Amazon is holding over 1 million employees, earning “232.9
billion USD in revenue and 10.1 billion of that being net profit 8” (averagely a year) as well as having a range of stores
all around the world from 526 retail stores, 19 Amazon Books stores, and 4-Star stores dispensed by Amazon outlets
proving it to be a very large business. Having over a million employees is very helpful for Amazon to become more
successful as they all have different job roles, from being delivery drivers to packers. If these employees further
develop in their roles, it’ll allow the business to run more smoothly. Also, having a variety of stores around the world
is also helpful to become more successful because it’ll allow more recognition, potentially increasing their sales.
These are some of the reasons why it helps Amazon to successful. Their profit margin is normally displayed as low as
“Amazon intentionally posts low profits because they take the vast majority of the money they earn and invest it
right back into their company so that it will profit all the more in the future.”9 Though people might say the business
is failing because of low profit margin, it isn’t exactly true. For example, Amazon seems to be taking over the online
retail business industry through many strategies, having over “310 million active customers” 10 purchasing
goods/services from them. Not only are Amazon successful online, but also retail. For example, Walmart is known to
be the largest retailer, however with the rate of success Amazon are going at, they will surpass Walmart soon
enough. Amazon investing their profit back into the company seems to be a very good tactic for the long term.
Sector
Amazon is a tertiary sector, also known as the “service sector”, which means they don’t really make the products,
rather it provides a valuable service where buyers alongside other companies are willing to purchase. Amazon sells a
range of departmental products, from beauty, books, clothing, games, computers and many more, showing that they
sell a range of products, allowing to have an increase in different types of customers.
Aims and Objectives (Reasons for Success)
Jeff Bezos has had a few aims and objectives with Amazon from becoming an “everything store” to now trying to
become the biggest technology company to go to. Their mission statement is “We aim to be Earth’s most customer
centric company. Our mission is to continually raise the bar of the customer experience by using the internet and
technology to help consumers find, discover and buy anything, and empower businesses and content creators to
maximise their success.”11 Amazon wants to improvise their customer service the most as they believe their
customers should come first. Not only customers, but they also want to help other companies to become successful,
which also gives a good image to their brand. Amazon is attractive because of innovation. For example, to become
the number 1 technology company, Amazon are trying to continuously develop their technology (website services
etc) to satisfy their customers and make them stand out compared to their main competitors like eBay, JD and
Alibaba.
With these aims and objectives, it helps the company to become more successful as they believe in making
everything perfect, for the customers especially, so the public will see Amazon as more reliable and professional and
5
https://fowlerstclair.com/blog/disadvantages-of-incorporating
6
https://en.wikipedia.org/wiki/Amazon_(company)
7
https://www.statista.com/statistics/672782/net-sales-of-amazon-leading-markets
8
https://www.junglescout.com/blog/how-much-does-amazon-make-in-a-year
9
https://www.vox.com/recode/2019/8/21/20826405/amazons-profits-revenue-free-cash-flow-explained-charts
10
https://home.bluesnap.com/snap-center/blog/online-marketplace
11
https://www.aboutamazon.co.uk/uk-investment/our-mission
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